UK economy receives £13 billion boost from Guernsey-based funds

New research highlights major contributions to insurance industry

UK economy receives £13 billion boost from Guernsey-based funds

Insurance News

By Mika Pangilinan

Guernsey has been instrumental in channelling investment into the UK, with new research indicating that funds based in this British Crown Dependency hold assets valued at £57 billion.

According to a report by London-based consultancy Frontier Economics, capital investment by Guernsey-based funds have increased 14% annually since 2020, countering the overall decline in Foreign Direct Investment into the UK.

The report additionally found that UK fund managers earn £2 billion in annual fees generated by these funds, contributing not only to tax revenue but also providing a social value estimated at around £3-4 billion each year.

Moreover, the use of Guernsey’s captive insurance structures by UK FTSE 100 companies could result in collective annual savings nearing £100 million, according to the report. The island’s international pensions also contribute approximately £30 million per year to UK professional services firms and investment managers.

The research by Frontier also highlighted Guernsey’s role in aligning with several UK policy priorities, such as transitioning to net zero, infrastructure funding, and regional investment.

Additionally, Guernsey’s finance sector has channelled substantial capital investment into the UK, providing support to small and growing businesses, investing in infrastructure projects such as green power generation assets, and contributing to improvements in the housing stock.

Similarly, the island’s insurance, pension, and private wealth sectors have had a positive impact.

As Europe’s largest domicile for captive insurance, Guernsey channels insurance business through London's wholesale insurance markets, which might otherwise be diverted to other regions like Bermuda, the Cayman Islands, or the USA without the island’s expertise and regulatory framework.

Rupert Pleasant, CEO of Guernsey Finance, commented on the report’s findings in an emailed news release.

“This report has been key in highlighting the value of Guernsey to the City of London and the UK more broadly,” said Pleasant. “The island’s financial services industry has played a significant role in increasing the international competitiveness of UK financial services providers, improving risk-adjusted returns and diversifying portfolios. It represents a mutually beneficial collaboration.”

He added: “We are proud to be a part of the British family. The symbiotic relationship that Guernsey enjoys with the UK benefits both jurisdictions. We hope this partnership will continue to grow, to preserve our existing value and identify future opportunities for collaboration.”

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