Guernsey-based funds channel significant investment into the UK and currently hold UK assets worth £57 billion, according to research by consultancy firm, Frontier Economics, which has highlighted the contribution of Guernsey’s finance sector to the UK economy.
It found that capital investment into UK assets by Guernsey-based funds had increased by 14% per year since 2020, generating £2 billion of fees annually for UK fund managers and significant additional tax revenue for the UK.
Guernsey’s finance sector provides more than £3 billion in social value to UK. Aligned with UK policy, Guernsey funds are supporting small and rapidly growing businesses in the UK as well as investing in infrastructure such as green power generation assets and facilitating improvements to the housing stock. The research also found that UK FTSE 100 companies collectively saved almost £100 million a year by using Guernsey captive insurance structures.
The island is Europe’s largest domicile for captive insurance. It had 199 captives domiciled at the end of 2023, according to statistics from the Guernsey Financial Services Commission (GFSC). Four new captives were formed last year along with nine new captive cells.
This leads to insurance business flowing through London’s wholesale insurance markets which, without the island’s expertise and regulatory framework, would go elsewhere in Europe or further afield to Bermuda, Cayman Islands and the US.
The Guernsey pensions sector is large with total assets under management (AUM) of all Guernsey domiciled pensions providers of over £11 billion in 2021. Guernsey international pension activity generates significant revenue for UK professional services firms and UK investment managers. This revenue could be as high as £30 million per year.
“This report has been key in highlighting the value of Guernsey to the City of London and the UK more broadly,” said Guernsey Finance CEO Rupert 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.”
“Guernsey might be a small island but it’s a big player when it comes to inward investment into the UK” adds Stephen Hare, Managing Director of Sovereign Trust (Channel Islands) Limited.
