HM Treasury has published an “Insurance Linked Securities: Consultation“, which describes the UK government’s initial thinking about the key features needed to attract ILS vehicles to the UK. The consultation focuses on collateralised reinsurance and CAT bond arrangements. It also assumes that:

  • These arrangements will include a PRA authorised, and PRA / FCA regulated, Insurance Special Purpose Vehicle;
  • My benefit from a new UK protected cell company structure; and
  • ILS will only be offered to qualified investors, or qualified institutional buyers.

The government is giving some thought to tax changes, in the hope that it will be able to attract genuine investment vehicles to domicile in the UK, without also attracting anyone who wants to engage in aggressive tax planning or tax avoidance.

HM Treasury will publish draft regulations “for a new Insurance Linked Securities framework later this year“. If there’s demand for a UK venue or platform for ILS secondary trading, it will consider platform design later.

The consultation period closes on 29 April 2016.