Isle of Man Finance

Major Japanese insurance group establish Reinsurer on the Isle of Man

The first Japanese owned life reinsurance company to set up business in the Isle of Man received its licence to operate from the Insurance and Pensions Authority (“IPA”) in April 2007 and since then has transacted significant business.

This substantial operation was initially capitalised at Yen 10 billion, £40 million.

Tokio Marine Bluebell re Limited (TMBRL) is fully licensed as a life reinsurer and, to date, has been transacting business with companies within the Millea Holdings, Inc. Group. Its sophisticated reinsurance products provide capital protection as well as life cover for products sold in the Japanese domestic life insurance market, a significant and developing sector.

Its majority shareholder is Millea Holdings, Inc., the giant Japanese insurer, whose stable of companies includes Tokio Marine & Nichido Fire Insurance, with significant interests in both life and non-life insurance. The other partner in this joint venture is an affiliate of a leading U.S. bank, JPMorgan Chase & Co.

LCL Services (IOM) Limited (“LCLS”) was selected as the insurance manager. LCLS has managed the establishment and authorisation process and has now seen the company successfully through its first year end.

Isle of Man – Professional and Pragmatic Regulation

The Isle of Man won the Japanese business against considerable international competition. Millea Holdings considered several other international jurisdictions before choosing the Isle of Man. Key to the decision of the shareholders to establish their reinsurance venture on the Isle of Man was the professionalism and pragmatism of the IPA the island’s insurance regulator. Throughout the establishment process and since, the IPA has worked closely with all parties to consider swiftly and carefully the many innovative features that TMBRL brought with it, culminating in speedy approval of the life reinsurance license for TMBRL and the transaction of its first reinsurance business within a few days of being authorised. LCLS was appointed at the beginning of February 2007 with authorisation being obtained by April 2007.

Stuart Fairclough, Chairman of LCLS, commented following the establishment:

“In view of the complexity of the business, I believe the rapidity of establishment and authorisation of TMBRL could not have been matched elsewhere. Being able to achieve this was a major factor in the Japanese opting for the Isle of Man – and is again a reflection of LCL’s expertise and the responsiveness of the IPA and their actuarial advisers.

“The Isle of Man remains the biggest player in the international life market and consequently has the greatest skills base of almost anywhere else in the world. It is also an experienced centre for captive insurance and therefore already has the regulatory framework in place to handle this type of complex reinsurance business offering the company a secure working environment.

“The Isle of Man also has fair value accounting rules which suit Japanese companies operating in this specialised area of the market allowing them to reflect fair value for the assets they are holding in their business. And crucially, we also have the necessary actuarial and financial expertise available on the Island to handle this calibre of reinsurance work.”

The active and ongoing support of the IPA has been welcomed by Millea, both in the early days and as TMBRL plans to grow its business further in future.

Isle of Man – Significant Insurance Expertise

Recently established, TMBRL is a significant, substantial and well capitalised Isle of Man-based life reinsurer and although presently operating on a captive basis, its license is not restricted to captive business. In the establishment of TMBRL and its swift entry to the market, it was necessary to bring together not only the insurance and investment expertise of Millea and JPMorgan and the active support of the IPA but also the life insurance and captive management skills of the parties who have provided services to TMBRL and who have assist in running its business and who help provide both the capability and capacity to develop its business in the future to meet the needs of this sophisticated reinsurance market. LCL’s background is running its own life insurance business as well as a third party administration service for other life insurance companies. Its background and skill base provides the actuarial, accounting, administrative and governance capability necessary for a large and significantly capitalised insurer such as TMBRL. This expertise based in the Isle of Man, augmented by LCL Group’s London-based capabilities in providing professional services to captive and non-life insurers, was a key component in the selection of the Isle of Man as the jurisdiction of choice, opting for LCLS as Insurance Managers and the speedy and successful establishment of TMBRL. LCLS forms part of the LCL Group’s life insurance division and is a specialist division of Charles Taylor Consulting plc.