A trend-setter in insurance-linked securities has completed another first in Guernsey.
Cedric Edmonds, director of Solidum Re (Guernsey) ICC, first started doing business with the island in 2009. He has gone on to become a pioneer for the use of blockchain in ILS, and Solidum Re (Guernsey) ICC has just become a member of the Guernsey-headquartered International Stock Exchange.
In 2011 Solidum Re Eiger IC was admitted to the Exchange’s Official List in what was the first private cat bond transaction to be listed on any exchange worldwide.
Last year Mr Edmonds announced that Dom Re IC, a cell of Solidum Re, had issued what was believed to be the first notes ever to have been digitised on a private blockchain. Referred to as ‘ILSBlockchain’, the mechanism replaced the role of a traditional settlement system for the note issue.
“It is very exciting to be part of another first and I am looking forward to bringing more innovative ILS transactions to an exchange that combines cost-effectiveness and convenience with global standards and international recognitions,” he said of the TISE listing in an address to Guernsey Finance’s ILS Insight event held in Zurich.
Mr Edmonds said he selected Guernsey initially because he was impressed with the ‘can do’ attitude of the island’s insurance industry.
“I spoke to various jurisdictions about what I wanted to do. Guernsey was only place that said: ‘Well we’ve never done this before, but we understand what you’re trying to do, and we think we can do it.’ That was the attitude I needed to do innovative things.”
Mr Edmonds said that he had always found the island’s regulator, the Guernsey Financial Services Commission, to be helpful and supportive.
“I have got to know the GFSC – they are approachable, have always listened, are willing to accommodate, and are not just rules-based, more service provider than policeman.”
Mr Edmonds said that his interest in the blockchain started in 2016, when he developed problems with his banking relationships. He lost access to Euroclear, the specialist in securities transactions, and found trying to secure access through other banks was difficult.
“I thought, can we do something ourselves?” he said. “I thought about blockchain and wondered if it would be a possible solution. I searched on the net, found a potential solution, and it seemed to work. We wouldn’t be transferring physical money around, it would be transferring beneficial interests in real world assets.”
The solution was to turn the business into its own paying agent, using a High Street bank, and its own settlement system the ILSBlockchain. Participants on the ILSBlockchain hold assets on their own node, they are responsible for their own server and keeping their keys safe, and with no custody bank and no fees, trading happens instantly.
“This way we reduce costs and complexity, it involves fewer people, the documentation process is simpler, things happen quicker and it’s cheaper,” he said.
Through the membership of TISE, Mr Edmonds intends for Solidum Re (Guernsey) ICC to sponsor the listing of its incorporated cells’ own debt securities and potentially Solidum Partners AG’s investment vehicles on the Guernsey exchange. It is the first time that the core of an Incorporated Cell Company has been admitted as a member of TISE, which is home to some world-first listed ILS transactions.