23 April 2015Analysis

Gibraltar completes first ILS transaction

Gibraltar has completed its first insurance-linked securities (ILS) transaction, a year after announcing ambitions to establish itself as a new ILS jurisdiction.

Lottoland, a specialist provider of betting services on international lotteries, has placed a €100 million securitisation that transfers the risk of substantial or multiple pay-outs on lotteries the company runs into the capital markets.

This risk would normally have been covered under a traditional insurance policy.

The ILS has been placed within the European Union by means of an issuance vehicle, Euroguard Insurance Company, based in Gibraltar. Established in 1996, Euroguard is part of financial services group MMI Holdings.

Albert Isola MP, Minister for Financial Services for the Government of Gibraltar, said: "I am delighted that Gibraltar has completed its first ILS transaction in record time just over a year after setting out our plans for insurance linked securities in Gibraltar. Mike Ashton and the team at Gibraltar Finance have worked extremely hard to make this happen and I am pleased that our efforts in this new area of business are paying off.

“It is particularly gratifying that this transaction involves businesses from both of Gibraltar's vibrant and growing insurance and gaming sectors. These are important sectors in our community providing valuable employment and other opportunities for our economy.

“Our ILS journey has been swift and has been helped enormously by the formation of the ILS Working Group with Andre Perez last year in which a number of the largest ILS players participated.

“Finally, I would like to thank both Lottoland and inea GmbH for choosing to structure the transaction here and for their confidence in Gibraltar as the place to break new ground for the ILS sector within the European Union.”

Law firm Hassans advised Euroguard in the insurance transaction. In the past, Hassans has assisted with the drafting of Gibraltar’s Insurance Companies (Special Purpose Vehicles) Regulations 2009, was involved in drafting the Protected Cell Companies and insurance legislation and has helped to set up the majority of Gibraltar insurance companies over the last 14 years, including protected cell companies.

Nigel Feetham, a senior partner at Hassans, said: "Hassans have acted for Euroguard Insurance Company since its establishment almost 20 years ago. This is an interesting deal, and importantly, it is good to see the ILS market embracing this transaction.

"Hassans’ capital markets practice has been built over many years of advising leading international institutions. Our professional insight in both capital markets and insurance structuring therefore allows us to provide clients with a unique offering in the ILS space. We are delighted to have been professionally involved."