Gibraltar minister aiming to develop strategic captive partnership with UK

Gibraltar’s minister for financial services Nigel Feetham is hoping to develop a strategic partnership with the UK on captive insurance firms.

While spearheading an inaugural session with Gibraltar’s government working group on captive regimes last week (14 February 2024), Feetham said a partnership with the UK would mark a “significant milestone” in the implementation of a captive insurance regime in the territory.

The dual regime would mean that any captive insurer in Gibraltar writing UK business would have to respect the Gibraltar Authoristion Regime (GAR) arrangements – meaning Solvency UK, which is soon to replace Solvency II, would be applicable.

A captive is a wholly-owned subsidiary insurer formed to provided risk mitigation services for its parent company or related entities.

According to the London Market Group’s (LMG) A Plan For the Future report, published in September 2023, captive premiums were predicted to reach £128.3bn ($161bn) by 2030.

Feetham told Insurance Times: ”The government of Gibraltar has received approval from the Gibraltar regulator for the setting up of a ‘cell captive’ for the government.

”I am now in the process of securing final approval from within the government to allow me to proceed.”

During the session with the government working group, Feetham said: “Whilst it will initially sit outside the common market arrangements with the UK, I believe it could in the future be possible, through this regime, to deliver on a common objective, working closely with the UK government and its industry.”

He explained that the GAR arrangements were intended to provide a long-term legislative framework for financial services between Gibraltar and the UK.

On 25 January 2024, the UK Treasury provided Gibraltar with the green light for the development of a new captive regime.

UK captive regime

Last week, tech giant Google was said to be in talks to participate in the captive market at Lloyd’s of London. 

As reported by CityAM, Google was rumoured to be seeking approval to establish a captive through Lloyd’s syndicates and had been granted in-principle approval to proceed.

Earlier last year, November’s Autumn Budget documents revealed that the UK government planned to set up a consultation on the creation of a captive market in the UK.

At the time, chancellor Jeremy Hunt said there would be a “consultation on introducing a UK regime for captive insurance companies”.

He explained that the government would consult on the design of a new framework for encouraging the establishment and growth of captive insurance companies in the UK, with the consultation set to launch in Spring 2024.

Insurance Times has contacted Google for further comment. Apollo and Lloyd’s were also contacted, but both declined to comment.

• Insurance Times has converted dollar amounts into pounds using an exchange rate of $1.27 = £1, which was correct as of 1 February 2024.