Guernsey’s longstanding business ties with China are starting to generate captive insurance business from the country, says Dominic Wheatley of Guernsey Finance
Progress on developing business in China can be slow, but is starting to prove worthwhile for Guernsey.
Guernsey Finance, the promotional agency for the island’s finance industry, has had a permanent presence in mainland China for more than a decade through our full-time representative Wendy Weng.
Her work in promoting all aspects of Guernsey’s wide-ranging finance industry—which includes significant depth in investment funds, private wealth and pensions, and aspiring developments in fintech—has been built on by the individual efforts of Charles Scott, managing director of Guernsey-based Alternative Risk Management (ARM).
ARM, Europe’s largest independent insurance manager, is owner-operated, and two-and-a-half years ago Scott decided to explore opportunities in China for captive insurance business.
Since then he has made more than 15 trips, of varying duration, to the country.
“It’s a long and fairly hard road,” he admits. “You have the 12-hour flight and jet lag is an issue that you have to overcome on short trips. It isn’t one for the faint-hearted.”
This perhaps explains why other captive managers in Guernsey have not followed Scott in pursuing Chinese business so far. But the former Cayman deputy regulator, who also worked as an auditor and management accountant in the industry before moving to Guernsey to launch the forerunner business of ARM, says he believes it is a land of opportunity for the island, something we agree with and are keen to support development on.
Last year Scott established a joint venture to promote captive insurance structures and management services with Chinese captive group Beijing Airport Captive Management Consulting. He has secured captive insurance clients and is closing in on other significant deals.
ARM, which continues to grow its international focus as the European captive insurance market slows, was involved in the launch of Brilliant Reinsurance in Guernsey in 2017, the first Chinese reinsurance company to be established in the island, focusing on business being retroceded from the Lloyd’s of London market.
“I am very excited about the opportunities in China. Captives are virtually unheard of, virgin territory, and no other domicile marketing captives to China corporates has so far enjoyed any success,” Scott said in Guernsey at an Asia-focused event organised by Guernsey Finance.
“I believe there is a huge opportunity and I would absolutely urge my colleagues in the industry to come over, and do the hard yards. You will see the rewards.”
Scott said that an important element of his work was to embrace the business culture and etiquette of the country. “The younger generation speaks English but the older generation doesn’t. I’ve learned a few words of Mandarin—it helps and shows respect to the people you are meeting.”
Scott added that the Guernsey regulator, the Guernsey Financial Services Commission, had been “very supportive” in enabling Chinese business in the island, particularly as an enhanced know your customer process was required when doing business with Chinese companies and individuals. He also called on Guernsey industry to become “more joined-up” in pursuing and enabling Chinese business.
ARM has learned that Chinese principals need to feel comfortable working with a jurisdiction, and Guernsey’s reputation as Europe’s number one captive insurance domicile was of key importance, as were the more natural elements of close proximity to London and position in the European time zone.
“Logistically, Guernsey is really well placed for Chinese businesses expanding their focus internationally,” Scott added.
Weng says the Chinese government had been supportive of Guernsey’s promotion of captive insurance in the country, which has also had an educational element.
She is heartened to see more Guernsey firms moving into China or Asia, and more visits being made by Guernsey practitioners to the region. She urged local firms to “work as a team” in getting best value from the market.
Weng visits first and second-tier cities in China every month, meeting local government, intermediaries, institutions and professionals to promote Guernsey and its services. She is supported in Asia by permanent Hong Kong representative Dorothy Kwok. Guernsey regularly hosts events in mainland China, most recently a captives event at which Scott was among the speakers.
Guernsey is uniquely positioned to serve the needs of this market, whether through risk management tools in the insurance sector, long-term asset protection with the fiduciary sector, or using an international investment fund distribution platform. We are looking forward to seeing Guernsey and Chinese companies grow internationally together.
Dominic Wheatley is chief executive of Guernsey Finance. He can be contacted at: email@example.com
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