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| 12 minutes read

In-Perspective #1 Nigel Feetham QC

Each month we will be meeting with lawyers from around the firm to provide a series of industry perspectives in relation to current affairs.

This month, we’ve sat down with Partner Nigel Feetham QC to discuss, among other things, the insurance industry in Gibraltar and how it is facing the challenge of Brexit.

  Q: What are the challenges presented by Brexit to the Gibraltar insurance industry?

 A: Brexit has been the key focus of my professional work over the last 3 years.

As a consequence of the UK’s decision, which also includes Gibraltar, to leave the European Union, a likely scenario in the event of a hard Brexit is that Gibraltar and UK insurance companies will lose their rights under European Union law to continue to do insurance business across the European single market. These rights under European Union law are known as “passporting rights”.  There have been concerns that following a hard Brexit UK and Gibraltar insurers will not be able to continue to service policyholders and claimants across Europe in line with applicable regulatory rules, known as contract continuity.

As a result, I have been advising Gibraltar insurance companies, including captives, on Brexit contingency plans and their implementation. There are three Brexit-related contingency options apart from run-off, namely, a statutory portfolio transfer, setting up a new insurer, and re-domiciliation.

Q: Can you briefly take us through each of the scenarios of portfolio transfer, new insurer and redomiciliation, and what the challenges are in each case?

The first is a portfolio transfer of EU insurance liabilities to an EU insurer as transferee. This would then enable the U.K. or Gibraltar insurer to focus on their U.K. and international business whilst allowing existing EU policyholder claims to be paid through the EU insurer. Portfolio transfers, however, are expensive to execute. You have legal, regulatory, actuarial and other business costs associated with the process, such as newspaper advertising and publicity requirements. This can take a substantial amount of time to complete due to regulatory and policyholder consultation periods, together, in cases where court approval is required, of obtaining the directions and sanctions court hearing dates. EIOPA have helpfully published recommendations supporting the process, permitting portfolio transfers that have been ‘initiated’ prior to Brexit to be completed.

Brexit Clock

However, some of the smaller insurers may not have the financial resources – deep pockets – necessary to undergo a portfolio transfer. Transferring books of business is not just costly from a process perspective, it would also require assets and reserves supporting those insurance liabilities to move across and therefore the transaction must have a willing buyer.

The second scenario is a redomiciliation. In other words, ‘moving’ the company to another European Member State. You can achieve this through a merger in the case of a UK company, or redomiciling the company in the case of a Gibraltar company. The latter process involves an insurance licence application to an EEA state regulator, can therefore also take a substantial amount of time, and is only suitable for companies that undertake EU business. The process can obviously be disruptive since it requires a change of management and board composition but is also dependent on the EU Regulator granting the insurance licence, which it could do subject to conditions, or even declined as the case may be.

The third scenario is setting up a new licensed insurer in the EU but this requires separate capitalisation and a portfolio transfer from the UK/Gibraltar insurer of its EU liabilities and is therefore subject to the same limitations as scenario 1 and 2.

Where does it leave insurance companies that cannot undergo any of these scenarios 1, 2, or 3? Under the last potential scenario, EIOPA have requested EEA Regulators to implement a transition period for the payment of existing insurance claims in the case of a ‘no-Brexit deal’. Each EU Member State has announced, or hopefully will be announcing shortly if they haven’t already, their own ‘no-deal’ Brexit measures. The transition periods I have seen range from 9 to 24 months. The question on the 31 October will be, what happens after the end of that transition? UK and Gibraltar insurers with longer tail liabilities will obviously be hoping for further extensions, and in the case of smaller entities who may not have the financial resources for separate capital requirements in each EU territory for these books in run-off, without the need to establish fully licensed branches. Unless the EU applies proportionality to allow an orderly run-off so that insurance claims can continue to be paid in full, how else could existing claims be paid and insurers continue to service existing claimants?

Q: You were appointed to the rank of Queens Counsel in June 2019 – how important was that for you?


Over the years I have received, or greatly contributed to Hassans receiving, a number of global insurance industry awards, but there is no honour higher than being recognised by your home peers.

The QC appointmentwas “in recognition of the highest standard of personal professional integrity and competence.” At a personal level this was very important to me and the recognition has filtered through to my strong international client base which is also very welcome.


I feel that industry awards are very important as benchmarks of success. The industry awards I, and the firm, have received include:

  • Winner of the European and UK Captive Law Firm of the Year in November 2018.
  • Highly commended at the Financial Times Innovative Lawyers Award Europe in October 2018.
  • Highly Commended in the European & UK Captive Awards in October 2017.
  • Winner of Law Firm of the Year at the European Captive Services Awards in November 2016.
  • Winner of the Offshore Law Firm of the Year award in the Captive Services Awards in February 2016.
  • Highly Commended at the Financial Times Innovative Lawyers Awards Europe in October 2016.

 I am also proud to be an author and co-author of numerous books including “Protected cell companies: a guide to implementation and use”, which was cited with approval in PAC RE 5-AT v. AMTRUST NORTH AMERICA, INC., No. CV-14-131-BLG-CSO (D. Mont. May 13, 2015), a decision of the Federal Court of Montana (United States).

Q: Tell me about the ‘La Linea initiative’ for a new captive domicile. Very few professionals can claim that a cross-border initiative on their part has directly influenced national/regional policy agendas in a large neighbouring country/region – you seem to have achieved that?

 A: As a result of the challenge presented by Brexit, in 2017 I started to explore the possibility of Gibraltar captives/insurers relocating a few hundred metres to the neighbouring town across the border with Spain (La Linea) whilst continuing to work collaboratively with Gibraltar captive managers.

This option was potentially attractive for Gibraltar companies with existing an infrastructure; it helped retain jobs and economic activity in Gibraltar whilst also creating employment and generating tax revenues for La Linea as an alternative to relocating to Malta.

I visited Madrid on several occasions and met with the Spanish regulators. I also discussed this with the Spanish Mayor of La Linea. The initiative quickly started receiving considerable media publicity both locally and internationally.

It was evident from client discussions, however, that for La Linea to be able to successfully compete with Malta as an EU captive domicile it was necessary for the territory to have a low/special tax regime. This presented considerable challenge as it required support from the Spanish National Government, the local Municipal Government and navigation through complex EU law issues. But what started off as an idea has now began to gain some traction in Spain. The PSOE-A, which is the Andalucian regional arm of the PSOE, who are currently the political party in power at a national level in Spain,  have on 25 June 2019 entered into an agreement with the La Línea municipal authorities to “Mediate, to obtain a special tax status for La Línea, to cover, amongst others, activities in the insurance, financial and online gaming sectors”. Autonomous status for La Linea is, of course, a pre-requisite for a special tax status both under EU and Spanish national law.

A Spanish Legal Opinion has also been commissioned this year from a Spanish constitutional lawyer from the University of Madrid by the Mayor of La Linea. The Opinion concludes, translated from Spanish, that “In any case, the general conclusion of this opinion, for the reasons detailed therein, is that there is no impediment or constitutional, statutory, legal or European law prohibition for the conversion of the municipality of the Línea de la Concepción into autonomy, under the formula of autonomous city, regardless of whether such process is more or less complex, expensive, convenient or timely.”

[The link to the recent PSOE agreement can be found here:

and a copy of the Spanish Legal Opinion published by Madrid University can be found here:

A few international news reports can be found here:


 Q: How would you describe the UK-Gibraltar relationship in Insurance/Financial Services?


I would describe this as a ‘relationship of partners’. The UK is the most important insurance/financial services market for Gibraltar. But Gibraltar is equally important to the UK.

Let me explain why.

90% of all premiums written by Gibraltar insurance companies are sourced from the UK. At least 1 in every 5 policies written in the UK motor market are sold by Gibraltar insurers – that’s at least 20% of the UK market.

So, Gibraltar insurers provide underwriting capacity to the UK that might not otherwise be available, foster competition and this also helps provide jobs for thousands of people in the UK.

Brexit has made the Gibraltar-UK partnership relationship even more important for both sides, taking advantage of what each have to other.

By way of example, Maltese insurance companies writing UK business can re-domicile to Gibraltar as a result of Brexit. Gibraltar could complete the process for them in months. Further, since there is no re-domiciliation legislation in the UK, re-domiciling to the UK is therefore not an option. Instead, Gibraltar’s re-domiciliation legislation is user-friendly and straightforward. I visited Malta on a number of occasions during 2017 and 2018 to explore this opportunity for two-way business exchange between the two jurisdictions and this has received considerable media attention since.

Q: What is the common market in financial services between Gibraltar and the U.K?


The recently announced single market with the UK is a continuation of the ‘Gibraltar Order’ negotiated by the Gibraltar Government many years ago. The Gibraltar Order was a political agreement between the Gibraltar Government and the UK Government. It was a necessary agreement because Gibraltar and the UK are not separate Member States, so EU law does not apply between us; therefore, none of the ‘fundamental freedoms’ i.e. the Freedom of Services and Establishment used by Gibraltar insurers apply under the EU Treaty. What the Gibraltar Order does is treat Gibraltar as if it were a separate member state and therefore creates a Single Market for financial services/insurance.

That Single Market between the UK and Gibraltar will continue post-Brexit.

It is reconfirmation of the solid Rock-like relationship between the UK and Gibraltar.


Q: How would you describe the Gibraltar regulatory approach?


The key to Gibraltar’s success has been having a responsive and approachable regulator.

What this means is the following:

Responsiveness – a Gibraltar insurer means speed to market. How quickly can the regulator respond to requests from a licensee. It could be licensing. This is crucial to business.

Approachability – being able to engage with your regulator on short notice. In Gibraltar you can request a meeting and you are likely to get it within a few days. You can also pick up the phone and have your supervisor at the other end of the line. Again, this is crucial to business.

Without this we would not have been able to grow the sector as we have done.

But, of course, with regulation comes responsibility and Gibraltar is a well-regulated jurisdiction at par with the UK. It is at par because the underlying legislation, known as Solvency 2, is the same.

 Q: What is the attraction for U.K. consumers buying insurance from Gibraltar insurers?


Gibraltar insurers offer UK consumers increased choice, competitively priced products, and the same level of consumer protection as in the UK.

Taking each of these in turn.

Choice – Gibraltar insurers increase the number of insurers in the market and therefore provide what is known as additional capacity. This increases competition and helps to keep prices down.

Competitively priced products – Gibraltar insurers operate a lower cost base than UK insurers because they use an outsourced model whereby the claims handling and administration is outsourced to the UK. Gibraltar insurers can therefore pass on these savings to UK consumers in pricing.

Protection – UK consumers have the same level of consumer protection as they do in the UK. For example, the UK Financial Services Compensation Scheme applies to the same extent to Gibraltar insurers.

And they do so in a common language – English.

This is good for the UK, good for Gibraltar and good for UK consumers. All this whilst helping to create thousands of jobs in the UK.

Q: How will the landscape change for the Gibraltar insurance sector over the coming years?


Firstly, Brexit changed the map of the Gibraltar insurance sector and will continue to do so over the coming years.

This is because as a result of Brexit, Gibraltar companies will lose their passporting rights in the EU; in other words, they will lose their ability to sell insurance products to EU consumers.

Those Gibraltar companies that sell insurance exclusively or predominantly to EU (non-UK) residents (apart from run-off) have had to consider the following options:

  1. portfolio transfer meaning transferring their EU policies to another EU insurer;


  1. redomicile to an EU domicile like Malta – one insurance company has already redomiciled; and


  1. look for new opportunities in the UK market.

Conversely, we have seen Maltese companies that do business in the UK redomiciling to Gibraltar. So, we are not just losing business – Gibraltar is gaining new opportunities as a result of Brexit.

Secondly, I see potential consolidation in the Gibraltar market through potential mergers and acquisitions.

Lastly, Gibraltar insurers have always been attractive to private equity investors. I see that continuing, if not accelerating, in the next few years.


Q: You have clearly had an extensive career – do you feel there is anything else in your career that you still need to achieve? And in three words, what in your view are the main ingredients for a successful career?


I will certainly not retire anytime soon – I am only 50!

I do think I have had an extensive career.

I have dedicated my career not just to the advancement of the reputation of the Gibraltar finance centre but also to a sustained commitment to legal scholarship.

I am the co-author of what is widely regarded as the leading reference book on PCCs. The book has been cited in professional education courses and by international captive consultants when advising clients. I believe I had the vision to co-author a book on a subject where very little had previously been written. In 2015 the book was cited in a US Federal Court judgment.

Authoring on subjects on which I was knowledgeable on was a strong passion of mine and this is the ultimate reward for the time it takes to create a reference book at this level; not many lawyers get their books cited in US law reports.

I have been an adviser to some of the biggest insurance corporates and have helped many Gibraltar insurance businesses set up and restructure including assisting with the IPOs/sales/M&A/financing. I have also practised in gaming and corporate/commercial law.

I have been a non-executive director of a number of companies of leading international groups, FTSE and Fortune 500 companies.

I was also a non-executive member of the Gibraltar Financial Services Commission and a Visiting Professor of a UK University.

It may be that my career focus could change in the future. I certainly do not intend to write as much as I did in the past, although I probably have one more book to write. But in terms of needing to achieve anything else in my career, I have no unfulfilled ambition. Taking Silk – QC – was that last career ambition.

My three words for a successful career are boldness, judgment and focus.

I wrote an article in 2014 which I still occasionally enjoy reading entitled Never too young or too old” discussing these issues. I have always had a love for history – especially the Italian Renaissance – and historical perspectives have found their way into much of my writings. It did in this article too.

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