Gibraltar receives go ahead for Part VII transfers
The government of Gibraltar has received confirmation that the UK Treasury will sanction Part VII asset transfers to (re)insurers based on the Rock.
The mechanism allows firms to reassign their assets to another legal entity, subject to court and regulatory approval.
Part VII refers to the section of the UK's Financial Services and Markets Act 2000 that enables (re)insurers to move different parts of their business onto a single balance sheet or to break parts of one business into separate legal entities.
The confirmation, which was put in writing after years of wrangling between the Gibraltarian government and the UK Treasury, may attract more (re)insurers looking to operate in the low-tax jurisdiction.
Michael Ashton from Gibraltar Finance told The Insurance Insider that he anticipated an uptick in Part VII transfers ahead of Solvency II as carriers look to strip themselves of old liabilities that could weigh heavily on their capital bases.
He said Gibraltar has had protected cell company legislation in place since 2001, which allows carriers to own legally distinct entities, known as the "core" and "underlying" cells.
"The protected cell company structure status may be of interest to run-off insurers looking to set up in Gibraltar," he said, adding that the "speed to market" was an advantage when dealing with the territory's insurance regulator, which aims to consider applications from new companies within 18 weeks.
Gibraltar's government said it was "fully committed" to working with insurers to develop new lines of business.
Fabian Picardo, Gibraltar's chief minister, said the confirmation was "great news" for the territory.
Gibraltar is a low-tax jurisdiction with a 10 percent corporation tax and 0 percent tax on investment income and capital gains.
Randall & Quilter, Brit and XL all have companies located in Gibraltar.