Insurance Business (Financial Guarantee Insurance: Special Provisions) (Guernsey) Law, 1996 (Consolidated text)

Summary

This 1996 Guernsey law creates a bespoke statutory regime for financial guarantee insurers (FGIs) that the States specifically designate by Ordinance. Rather than applying generally to insurers, it only bites once a particular Guernsey company has been named a designated FGI (currently only Peak International Limited under a 1997 Ordinance). It sets out how such a company's licensing, winding-up, insolvency administration and transfer of business must be handled, largely displacing the ordinary insurance and companies law regimes for that entity.

• Designation and regulation: The States may by Ordinance designate a Guernsey company as an FGI and impose bespoke prohibitions, restrictions, conditions or requirements directly, through a Commission licence, or via Commission directions.
• Winding-up and desastre: No application to wind up a designated FGI, or to declare it en desastre, may be made without the Commission's consent (or by the Commission itself); a shareholder resolution to wind up also requires Commission consent.
• Striking-off: A designated FGI cannot be struck off the Register, and no striking-off notice may be issued or published, without the Commission's consent.
• Transfer of policies: A designated FGI may transfer its financial guarantee insurance business to another body only under a scheme sanctioned by the Court, following an independent expert report approved by the Commission, Commission approval of the application, and specified public notice and policyholder/shareholder notification requirements.
• Insolvency administration: The law establishes special grounds, procedures, administrator powers and duties (set out in the Schedule), and court processes for placing a designated FGI into administration, including effect on security, discharge and replacement of administrators.
• Reserves, offences and liability: Provisions address reserves and share capital requirements, offences for false statements, the relationship between criminal and civil liability, and limitation of liability for persons acting under the Law.

Because the regime only applies to companies formally designated as FGIs by Ordinance, most insurance licensees are unaffected; compliance relevance is limited to any Guernsey company so designated, the Guernsey Financial Services Commission in its regulatory and consent-granting role, and policyholders or shareholders of a designated FGI who may be entitled to notice or a hearing in insolvency or transfer proceedings.

Key obligations

• An application by a person other than the Commission to wind up a designated FGI, or to have it declared en desastre, requires the Commission's prior consent.
• Notice of any third-party application for winding-up of a designated FGI must be served on the Commission at least seven days before the hearing date.
• A shareholder resolution to wind up a designated FGI does not take effect without the Commission's consent, which the Commission must withhold unless adequate provision has been made for interested parties.
• A designated FGI may not be struck off the Register, and no striking-off notice may be issued or published, without the Commission's consent.
• A designated FGI proposing to transfer its financial guarantee insurance business must obtain Court sanction of a scheme, supported by an independent expert's report approved by the Commission and Commission approval of the application.
• Before a transfer scheme application can be determined, notice must be published in La Gazette Officielle and an approved international newspaper on at least two occasions each, and 21 days must elapse since the last publication.
• A statement setting out the scheme terms and a summary of the expert's report must be sent to each policyholder and shareholder of the FGI before the transfer application is determined (unless the Court directs otherwise).
• Fee regulations made under the Law must not take effect until 30 days after notice of intention to make them has been given to the FGI concerned.

Applies to

designated financial guarantee insurers (FGIs), Guernsey companies designated by Ordinance under the Law, policyholders of financial guarantee insurance policies, shareholders of a designated FGI

Deadlines

• at least seven days before the hearing date: Notice of a third-party application to wind up a designated FGI must be served on the Commission this far in advance of the hearing.
• 21 days after last publication of the transfer notice: Minimum period that must elapse after the required Gazette/newspaper notices before the Court can determine a transfer scheme application.
• 30 days after notice of intention to make fee regulations: Fee regulations made under the Law cannot take effect until this notice period to the affected FGI has elapsed.

Related documents

• Insurance Business (Bailiwick of Guernsey) Law, 2002 amends this document
• Machinery of Government (Transfer of Functions) (Guernsey) Ordinance, 2003 (Consolidated text) amends this document