INSURANCE COMPANY MANAGEMENT IN GIBRALTAR - December 2011
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INSURANCE COMPANY MANAGEMENT IN GIBRALTAR December 2011
We communicate with you to understand your business, providing the expertise and creativity to develop and deliver excellent captive solutions, and we do so with passion.
CONTENTS
SECTION 1
INTRODUCTION 2
SECTION 2
INSURANCE COMPANY MANAGEMENT SERVICES 4
SECTION 3
GIBRALTAR AS A CENTRE FOR
INSURANCE COMPANIES 8
SECTION 4
WILLIS IN GIBRALTAR 14
GLOBAL CAPTIVE PRACTICE CONTACTS
Malcolm Cutts-Watson Dominic Wheatley
Email: cuttswm@willis.com Email: wheatleyd@willis.com
Direct line: +44 (0)1481 735628 Direct line: +44 (0)1481 735630
Mobile: +44 (0)7781 135628 Mobile: +44 (0)7781 135630
David Lewis Brendan Duggan
Email: david.lewis@willis.com Email: dugganb@willis.com
Mobile: +44 (0)7415 860347 Direct line: +44 (0)20 3124 7977
Mobile: +44 (0)7931 259334
Willis Management (Gibraltar) Limited 1
SECTION 1 –
INTRODUCTION
THE WILLIS GLOBAL CAPTIVE
PRACTICE IS A MAJOR FORCE
IN THE GLOBAL CAPTIVE
INDUSTRY WITH OPERATIONS
WORLDWIDE.
2 Willis Management (Gibraltar) LimitedThe Financial Services (Insurance Gibraltar offers favourable conditions
Companies) Act 1987 formally established when considered as an insurance
Gibraltar as an insurance centre. Over the company location:
last 20 years, Gibraltar has significantly
expanded its role as a major international – Internationally compliant British and
finance centre and its financial and EU jurisdiction
regulatory infrastructure is recognised – Positive regulatory environment
as being one of the best in the world. There favourable to inward investment
are more then 60 insurers operating in – Competitive low tax environment
Gibraltar today. within Europe
– Highly professional
Gibraltar licensed financial institutions insurance management
can provide financial services throughout – Well established and
EU and European Economic Area (EEA) efficient infrastructure
states, without requiring separate – Offers world class lifestyle choices
authorisation in each state. This is known – Legal system based on English law
as the ability to ‘passport’ services and is
the cornerstone of the Gibraltar insurance Gibraltar is a fast growing insurance
sector, which continues to grow steadily. market. The key to its growth is the ability
to provide a robust and reputable form of
Gibraltar has proven to be a particularly regulation that is accessible and can be
attractive location for insurance imposed proportionally on a case by case
companies wishing to underwrite risks basis depending on the nature, scale and
cross border into the U.K. and Ireland, as complexity of the insurers risk profile.
well as other EEA territories. Most notably,
it has rapidly grown its share of the U.K. The vast majority of insurers who have
motor market to a significant level. located themselves in Gibraltar cite speed
of licensing among the key reasons for
It attracts international insurance, choosing Gibraltar. The ability of the
reinsurance and captive insurance regulator to afford a style of regulation
companies alike and the Gibraltar that is responsive to the industry, where
offering is enhanced further by the ability timing of entry into a cyclical market is
to use Protected Cell Company legislation critical, is a key differentiator.
in order to structure the company.
Willis has been established in Gibraltar
since 1989.
Willis Management (Gibraltar) Limited 3SECTION 2 –
INSURANCE
COMPANY
MANAGEMENT
SERVICES
THE WILLIS GLOBAL CAPTIVE
PRACTICE IS AT THE
FOREFRONT OF INSURANCE
MANAGEMENT TECHNOLOGY
WORLDWIDE.
4 Willis Management (Gibraltar) LimitedWillis is one of the largest insurance Willis has a team of professionals qualified
managers in Europe and has management and experienced in each of the relevant
companies in all the major reputable disciplines, which include:
captive locations worldwide. Willis
Management (Gibraltar) Limited is a – Insurance
wholly owned subsidiary of the Willis – Accountancy
Group, the world’s third largest insurance – Company Secretarial
broking organisation. It was formed in – Corporate Governance
1989 and now has: – Risk Management
– 10 staff employed in Gibraltar Each servicing team benefits from
– Gross written premiums in excess qualified accountants and insurance
of £110 million professionals, supported by a number of
– Funds under management in excess experienced administrators. The office
of £250 million has a support infrastructure including a
Compliance Officer, Money Laundering
Our client base includes major Reporting Officer, and I.T. support.
multinational corporations, FTSE 100
companies, as well as privately owned Willis has established relationships with
independent insurers. the Financial Services Commission (FSC),
all major (and many minor) fronting
We offer a high quality full insurance insurers, reinsurers and broking houses
management service, encompassing to facilitate the smooth and effective
all aspects of strategic development administration of clients’ insurance
and administration. programmes. Willis also has established
relationships with all the major banks,
Our comprehensive consulting service legal advisers, auditors, actuaries
includes the provision of feasibility studies and other service providers to ensure
and specific advice in relation to insurance the smooth running of the company.
programme design, structuring and Whatever your requirements, Willis has a
operation. We also provide incubation team of dedicated professionals available
services for new self managed start to deliver service excellence.
up operations, including commercial
insurance and reinsurance companies. Willis Management (Gibraltar) Limited
offer the following management services:
The experience, commitment, expertise
and professionalism of our Gibraltar team – Insurance Management
are the qualities that we believe set us – Accountancy
apart from our competitors. – Company Secretarial
– Regulatory
– Corporate Governance
– Banking
– Consulting and Technical support
Willis Management (Gibraltar) Limited 5INSURANCE MANAGEMENT REGULATORY
– Captive development and – Ensuring compliance with
programme design local Regulator
– Underwriting – Monitoring solvency and capital
– Premium administration
– Policy documentation CORPORATE GOVERNANCE
– Claims handling, administration – Corporate Governance Framework
and reporting – Operational Procedures Manual
– Liaison with insurance and – Key Risks and Controls Matrix
reinsurance brokers – Schedule of Key Actions
– Maintaining underwriting accounts
and statistics BANKING AND INVESTMENTS
– Cash and bank administration
ACCOUNTANCY – Monitoring of investment managers
– Management accounts (if appointed)
– Group consolidation reporting – Monitoring currency exposures
– Statutory annual accounts – Authorisation and payment
– Full accounting documentation of expenses
including budgets and cash flow
statements CONSULTING AND TECHNICAL
– Design of accounting systems using SUPPORT
recognised software The Willis Global Captive Practice is
an integrated captive service provider,
COMPANY SECRETARIAL providing management and consulting
– Compliance with Gibraltar regulations services from its operations based in all
– Maintenance of corporate records major reputable captive domiciles.
– Notice and minutes of
directors meetings
– Preparation of board papers
© Stanhope by Hufton + Crow
6 Willis Management (Gibraltar) LimitedSECTION 3 –
GIBRALTAR AS
A CENTRE FOR
INSURANCE
COMPANIES
WILLIS IS PROUD TO BE
AMONG THE VANGUARD
OF INTERNATIONAL
INSURANCE MANAGERS
IN GIBRALTAR.
8 Willis Management (Gibraltar) LimitedINSURANCE REGULATORY The Government of Gibraltar has a record
POSITION of full cooperation with international
bodies and in October 2000 was the first
One of the principal attractions of jurisdiction to undergo a full Module 2
Gibraltar is its robust but responsive assessment by the IMF. The regulatory
regime was found to accord with
regulatory environment. Committed
best practice across the industry and
Gibraltar Government support, together
regulatory authority was ranked as a
with a favourable attitude to inward
‘well developed’ supervisor.
investment, has generated a positive and
accessible regulatory framework.
The IMF endorsed Gibraltar once again
in 2007 following its extensive review
Gibraltar’s legal system is based upon
of the Anti Money Laundering and
English law and statutes. It has enacted
Counter Terrorist Financing, Banking
legislation and implemented standards of
and Insurance areas. In all three areas
supervision which match those required Gibraltar was found to be meeting
by insurance legislation and supervisory international standards demanded of any
practice in the U.K. reputable finance centre.
An independent Financial Services Finally, in 2000 FATF undertook a
Commission (FSC) licenses and full review and classified Gibraltar as
supervises financial services licensees, a cooperative jurisdiction. In its
including insurance companies, in November 2002 report it also endorsed
accordance with EU directives. the Anti Money Laundering regime in
place on the Rock.
Gibraltar is a self-governing dependent
territory of the United Kingdom. It has Gibraltar is a participating partner of
been a full member of the European Union the OECD’s global forum on taxation.
(EU), under Article 299(4) of the Treaty of Following the signing of Tax Information
Rome, since 1973. Its membership of the Exchange Agreements with the worlds
EU provides access to the Single European major economies it shares the same
Market which is aimed at establishing ‘white-listed’ status as OECD member
free movement of capital, removal of states such as the U.K., USA, Spain
tariff barriers, freedom to establish and and Germany.
freedom to provide services.
TAXATION
INTERNATIONAL
The government implemented its
COOPERATION AND
new low tax, EU approved regime on
FINANCIAL REPUTATION January 1, 2011 with a 10% business tax
rate at the forefront of the fiscal changes.
As an integral part of the European Union,
Gibraltar is required to implement in full, The new low corporate tax rate is further
all EU legislation on regulatory and related complemented by the fact that passive
matters such as Anti Money Laundering income such as investment income is not
and the Financing of Terrorism and Crime, subject to tax.
and therefore cooperates fully with matters
and investigations carried out under There is no VAT, capital gains tax,
EU directives. inheritance tax or wealth tax. Neither are
there restrictions on repatriation of profits,
By its own founding constitution, or withholding taxes on dividends.
Gibraltar’s standards and supervisory
practices, governing the provision of Movement in IBNR and technical
financial services, match those of the U.K. reserves are allowable when computing
if they mitigate risk to the same extent taxable income. Combined with low tax
taking into account the respective nature this allows an insurance company to
and size of both markets. accumulate shareholder funds.
Willis Management (Gibraltar) Limited 9INSURANCE COMPANIES SOLVENCY MARGIN
The principal advantage of Gibraltar’s Minimum solvency is required in
EU membership is that an insurer is in accordance with EU Directives for
a position to provide coverage direct to insurance and reinsurance companies.
customers based anywhere within EU
and European Economic Area (EEA)
TIMELINE
states, without the need for local
‘fronting’ insurers.
The FSC’s service standard is to determine
a complete application within a minimum
This can be achieved either under the
of 18 weeks from its receipt.
‘Freedom of Services’ provisions, or
by ‘Establishing’ a presence in the
‘host’ territory. COMPANY ESTABLISHMENT
AUTHORISATION There are more than 60 insurers
operating in Gibraltar. The licensing of
Authorisation to establish an insurer an insurer is a relatively straightforward
or reinsurer must be obtained from the though detailed exercise, entailing the
FSC. There are ongoing requirements completion of an application form and
for submission of annual returns and the presentation of a business plan, which
accounts in prescribed formats to the is normally based on a feasibility study.
regulator in addition to technical reserve
and solvency requirements. It is recommended that an independent
specialist opinion on the possible taxation
Gibraltar has had in place Protected Cell and regulatory ramifications of operating
Legislation since 2001. A cell company in other territories, including other EU
in Gibraltar can legitimately passport and EEA states, is sought.
insurance business directly into Europe.
The establishment of an insurance
CAPTIVES company in Gibraltar involves its
incorporation and subsequent licensing by
Current EU legislation does not identify the FSC. A comprehensive due diligence
‘captives’ as separate types of insurance process is required to ensure compliance
operations to open market insurers and with Gibraltar’s Anti Money Laundering
are thus regulated in the same way as any legislation, and regulatory requirements
other insurance company. Gibraltar’s and Willis Group compliance requirements.
insurance regulations are fully in line with
EC directives. The insurance manager works in
conjunction with the client’s chosen
CAPITALISATION legal firm in Gibraltar to incorporate
the insurance company, which can
Under the current Solvency I Directive
be achieved in a short period of time,
the level of capitalisation required
usually within a week. It is important
is dependent upon the amount of
to ensure that the principal statutory
underwriting capacity the insurer wishes
documents are drafted in accordance
to offer and the classes of business
with the investor’s requirements and
underwritten. An insurer is required to
clearly reflect the insurance company’s
have a minimum paid-up share capital
prospective operations. This process is
€2,300,000 (€3,500,000 if liability classes
carried out in parallel with the insurance
are written). The minimum requirement
for a captive writing reinsurance business licence application process.
only is currently €1,000,000. The Solvency
II Directive will see a risk based capital
model come into effect on January 1, 2013.
10 Willis Management (Gibraltar) LimitedAn application in respect of a pure The application will require details of
captive insurer will be expected to be ownership, share capital and structure,
completed within a short time frame. A as well as personal questionnaires for all
non captive insurer’s application time will directors, controllers, and managers. A
generally take longer and also be partly comprehensive business plan must be
determined by whether the company submitted to the FSC including detailed
has elected to carry out its business three year financial projections giving
under ‘Freedom of Services’ provisions information regarding the proposed
or the ‘Establishment’ rules. The latter business to be written and programme
requires up to an additional two months structure. The business plan must
for the Host State Regulator to lodge any also cover expected premiums, claims,
queries with the FSC. A typical application operating expenses, investment income and
process, including the preliminary reinsurance protection. A comprehensive
feasibility study stage, will generally take due diligence exercise must be undertaken
a minimum of three and usually not more to ensure compliance with AML legislation.
than six months, providing the applicant
is prepared to dedicate the required time
and resources to the project.
CHECKLIST FOR ESTABLISHMENT
ESTABLISHMENT
2 Business plan
prepared
4 Business plan agreed
with insurer parent
6 Company
incorporated
8 Licence
application
10 Full capital
subscribed
12 Notify
Host State
Feasibility of an
submitted Regulators 13 Initial meeting
with Head of
insurer agreed insurance
Supervision (IS)
1 Parent company
board approval
3 Select board of
directors, and discuss
5 Final application
pack prepared
7 Directors’ meeting to
issue shares,discuss
9 Licence
approved
11 Licence
issued
of insurer business plan Business Plan and to
appoint: Auditors,
Secretary,
Bankers and Managers
Willis Management (Gibraltar) Limited 11ASSOCIATED COSTS
The costs associated with the incorporation, licensing and operation of a Gibraltar
based insurance company are very low compared with the financial benefit a successful
insurer can offer its shareholders.
COST OF ESTABLISHMENT
FSC LICENCE FEES
APPLICATION FEE CAPTIVES (RE)INSURERS £4,000
APPLICATION FEE GENERAL (RE)INSURERS £4,000
APPLICATION FEE LONG-TERM BUSINESS £10,000
APPLICATION FEE PCC £4,000
APPLICATION FEE PER CELL £1,500
INSURANCE MANAGER
INSURANCE MANAGERS SET UP FEE CAPTIVE (MIN) £10,000 – £15,000
INSURANCE MANAGERS SET UP FEE NON-CAPTIVE (MIN) £20,000 – £30,000
OTHER
INCORPORATION £2,000 – £5,000
STAMP DUTY £10
ANNUAL COSTS
FSC LICENCE FEES
GENERAL (RE)INSURANCE CAPTIVE £4,345
LONG-TERM (RE)INSURANCE CAPTIVE £10,800
GENERAL (RE)INSURER £19,650 – £21,700
LONG-TERM (RE)INSURER £27,250
PCC £4,345
PER CELL £1,625
INSURANCE COMPANY MANAGEMENT
MANAGEMENT FEE PURE CAPTIVE DIRECT WRITING (MIN) £80,000 – £120,000
MANAGEMENT FEE PURE CAPTIVE REINSURANCE (MIN) £40,000 – £60,000
MANAGEMENT FEE NON-CAPTIVE (MIN) £100,000
AUDIT FEE DIRECT WRITING CAPTIVE (MIN) £15,000
AUDIT FEE REINSURANCE CAPTIVE (MIN) £10,000
DIRECTORS FEES* (MIN) £10,000 PER DIRECTOR
* Typical fee per director, depending on nature of company and business written.
Note: Fees are typical examples, are not exhaustive, and will vary depending on the
complexity of the insurance programme and structure.
12 Willis Management (Gibraltar) LimitedWillis Management (Gibraltar) Limited 13
SECTION 4 –
WILLIS IN
GIBRALTAR
WILLIS’ TEAM COMBINES
LOCAL AND INTERNATIONAL
EXPERIENCE TO PROVIDE THE
MANAGEMENT STRENGTH
TO DELIVER OUR CLIENTS’
EXPECTATIONS.
14 Willis Management (Gibraltar) LimitedWillis’ office in Gibraltar is situated at TYPICAL PACK CONTENTS
Suite 827, Europort, Gibraltar, in the heart – Notice and agenda of meeting
of the finance centre. – Minutes of previous meeting
– Status report of all matters arising
Our business operation in Gibraltar from previous meeting
adopts the Willis Global Captive Practice – Summary of insurance cover provided
standards of insurance company by the Company
management services. The procedures are – Manager’s report, which will include:
tried and tested but flexible to adapt to – Executive Summary
specific demands of conducting business – Underwriting Review
in Gibraltar. (including reinsurance)
– Claims Review
Our Gibraltar team offer access to: – Financial Review
– Any other business (e.g. new
– Senior management with in excess of business, industry developments)
30 years combined experience in
insurance company management FINANCIAL INFORMATION
– Professionally qualified staff based – Management Accounts with
in Gibraltar comparatives as required
– The wider experience and expertise of – Underwriting Accounts
captive insurance available throughout – Claims information,
the captive practice appropriately analysed
– The substantial resources and – Other relevant information
expertise available throughout Willis
INVESTMENT INFORMATION
BOARD CONSTITUTION – Report by the Investment Managers
(where appointed)
In most cases, an insurance company – Portfolio Valuation
will have at least three directors, some of (where appropriate)
whom will be locally resident and some – Analysis of cash deposits
of whom will be shareholder
representatives and/or executive CORPORATE GOVERNANCE
management. Good governance and local – Compliance Review
regulation expects a suitably balanced – Schedule of Key Actions
and skilled board. Willis would be pleased – Review of key risks and controls
to introduce a number of potential local – Review of management procedures
directors from a range of professional – Review of Corporate
backgrounds and experience. Willis Governance Framework
executives do not sit on the boards of
companies we manage as we believe this
creates a significant conflict of interest.
BOARD OF DIRECTORS
MEETING PACK
Prior to each directors’ meeting, Willis
will prepare and distribute to directors
and approved interested parties a bound
board pack containing information to
assist the directors in the decision making
process and keep them properly advised of
the activities of the company. These may
also be circulated electronically.
Willis Management (Gibraltar) Limited 15INVESTMENT MANAGEMENT
An element of the financial return from Gibraltar has a good choice of professional
any insurance company will consist investment managers available. It is
of investment income generated from advisable that the investment manager
the company’s share capital, from its be accessible by the captive insurance
reserves and premium income and from manager as close liaison will be required.
retained earnings. The establishment and
execution of an appropriate investment Until an insurer has sufficient funds to
policy is therefore very important. justify the appointment of an investment
Investment policy should include manager, the normal route is to place
reference to the regulatory guidelines funds in fixed term bank deposits across
and ensure: a number of E.U. regulated banks,
appropriate to cash flow requirements.
– Security This service can be provided by Willis
– Liquidity under delegated authority from the board.
– Yield
Inter company loans are possible from
The purpose of the investment policy is ‘free’ assets subject to FSC notification.
to enable the insurer’s funds to be held in
a form which is secure and liquid enough KEY PERSONNEL
to meet the potential claims obligations,
whilst obtaining the best possible yield on Daily supervision of our client companies
the funds. In the case of a global insurance is the responsibility of one of our
programme, it is important to consider Managers and/or Directors.
the currencies in which the assets are
held against potential liabilities in order The majority of our staff have (or are
to comply with regulation and reduce making substantial progress towards)
the risk from currency exposure, and to relevant qualifications in either insurance
consider the claims profile of the company or accounting to ensure that an integrated
when establishing an investment strategy. service can be offered incorporating
all aspects of insurance company
Many insurance companies use management.
professional investment managers, who
follow formal guidelines laid down by the Development work is supported by our
board of directors. Gibraltar has access specialist ‘Captive Consultants’ across the
to many reputable investment managers Willis Global Practice.
experienced in the particular demands of
insurance fund management.
The appointment of an investment
manager may be considered once the
insurer’s funds reach the order of
€20 million, dependent upon the
shareholders’ and board’s attitude to
investment risk. Tenders will normally
be invited from a panel of investment
managers and presentations made to
the board of directors of the insurance
company, who will then decide which
manager to appoint.
16 Willis Management (Gibraltar) LimitedDerren Vincent, ACII, BSc (Hons) – Executive Director
Tel: +350 200 51801
Email: vincentdl@willis.com
Derren joined the U.K. Corporate broking arm of Willis in 1996. In July 2004 he was
appointed as the Underwriting Manager of the Gibraltar office and is now responsible for
the leadership and management of the Gibraltar office. Derren has extensive experience
of EU based captives as both manager and consultant.
Bruno Callaghan – Non-Executive Director
Tel: +350 200 51801
Email: callaghanb@willis.com
Bruno worked with Willis in London from 1985-1989. He returned to Gibraltar in 1989
to establish Callaghan Insurance Brokers Ltd who have been correspondents of Willis
since that date. He is a specialist in Latin America and Medical Malpractice insurance.
He is a non-executive director of various companies including other Gibraltar insurance
companies. He is a former President of the Gibraltar Chamber of Commerce and a
member of the Government of Gibraltar’s Economic Advisory Council.
Christian Chichon, ACA, BSc (Hons) – Director
Tel: +350 200 51801
Email: chichonc@willis.com
Christian joined Willis from PricewaterhouseCoopers (PwC) where he obtained his chartered
status in 2004 and specialising in leading audits for a range of major manufacturers and
pension companies of corporate entities. Christian returned home to Gibraltar to join
Willis in September 2004 where he now heads up the Accounting Team, and is ultimately
responsible for all accounting and financial services provided to our client companies.
Louise Cruz, FCCA, BA (Hons) – Director and Compliance Officer
Tel: +350 200 51801
Email: cruzl@willis.com
Louise worked for KPMG in Gibraltar between 1985 and 2001 gaining experience in audit,
accountancy, fiduciary services and liquidations. She acted as Company Secretary to an
insurance company subsidiary of a U.K. plc. Louise joined Willis in 2003 and is specifically
responsible for the internal and external compliance function in Gibraltar, as well as having
direct input to the overall Global Captive Practice compliance framework.
Willis Management (Gibraltar) Limited 17Willis Management (Gibraltar) Limited PO Box 708 Suite 827, Europort Gibraltar Tel: +350 20051801 www.willis.com Willis Management (Gibraltar) Limited Registered office: 23, Portland House, Glacis Road, Gibraltar. 7814/12/11
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