China Captives Expand into Europe Via Guernsey Domicile

Guernsey's profile as a key captive insurance jurisdiction for Chinese clients continues to build as Chinese business expands into Europe, according to a Guernsey Finance write-up.

"Proximity to London is a selling point, as is Guernsey's international reputation as a highly regarded legal and regulatory environment, and the high quality of professional services available within the jurisdiction," according to Kate Storey, partner at Walkers in Guernsey. "Another distinguishing factor is the existing co-operation agreements between Guernsey and China."

Since March 2017, there have been agreements in place between the Guernsey Financial Services Commission and the China Banking and Insurance Regulatory Commission, and between Guernsey Finance and a key business hub, the Beijing Airport Economic Core Zone.

Ms. Storey said, "The message that we're not directly affected by Brexit because we are not part of the UK [is] positively received—as [is] the message about the cost effectiveness, speed of set up and proportionate risk-based regulation of the Guernsey captive."

She added, "The fact that entrepreneurs can set up captives to be owned by a trust arrangement for the benefit of their family members [is also] of interest…."

Charles Scott, managing director of Guernsey-based Asset Risk Management, advised, "As regards new Chinese owned clients, we are working on a business plan for the first Chinese-owned Protected Cell Company as well as a cell in the ARM-owned Windward insurance PCC."

Guernsey remains Europe's leading center for captive insurance, responsible for more than a third of the European captives market.

Guernsey Finance also said that wealth management in the form of private placement life insurance (PPLI) is a suitable arrangement for the Chinese market.

Guernsey Finance Chief Executive Dominic Wheatley said of PPLI, "Life insurance can enable the tax-efficient transfer of wealth from the older generation to the younger without the need for estate executors. Done properly it can be very cost-efficient. The potential clients in China means there is an opportunity for Guernsey firms to set up PPLI in the island."