Isle of Man update

Date: 08 Nov 2023

Karen Jones

Citywealth Editor and CEO Karen Jones reports from a recent trip to the Isle of Man.

There was a sense of South African business in the Isle of Man on my recent visit and this is due to historic ties with former companies like Maitland now owned by Stonehage Fleming and initiatives locally to attract work from South Africa. The big news was the £400mn Isle of Man sustainable bond issue with low interest at 1.6% which is a green investment and helped purchase the new ferry in the Isle of Man. It is a £78m Diesel-electric hybrid ferry which locals call “the boat”. On the Brexit front, the Isle of Man is advocating for businesses to set up there instead of London to save costs of UK regulatory authorisations. The captive insurance business was also big news.

Captive insurance

Ross Dennett, Chairman, Thomas Miller, an insurance manager in the Isle of Man, says their main HQ is London but they have 60 people in the Isle of Man office but 800 worldwide with 20 locations. They work with shipping mutuals and manage the TT club mutual insurance company to provide insurance to 80% of all shipping container businesses. He says one trend is for captive insurance because premiums have risen substantially over the last 2-3 years ago in the global insurance industry. A captive is an insurance company that is set up and owned by a non-insurance company for the parent company and its subsidiaries. Captives date from the late 1950s, with the first captive insurance company in Bermuda. Thomas Miller runs 30 captives in the Isle of Man with 100+ captives locally including National Grid but the island has plans to grow this sector with their eyes on the 6,500+ captives in North America.

Simon Pickering, who is Head of Insurance and Pensions at Isle of Man Department for Enterprise, has understood this and has two big projects underway – Insurtech and Global Employee Benefits, which includes pensions. The biggest sector in the Isle of Man is insurance, which is 22.4% of the economy and 2,000 people are employed locally. The Insurtech initiative is to have government support for insurers to be tech proofed and a recent accelerator programme saw a partnership with Tenity (F10), a Zurich based organisation to bring a selection of start ups to the Isle of Man to sandbox their ideas. One of the few chosen was Spixii, who deal with calls from customers with digital automation which they say is 20 times quicker than other forms of communication like email. It also offers an out-of-hours experience dealing with customers’ requests 24/7. Pickering says they have 21 suppliers ready to help through their portal bringing solutions to large companies. He also says there is a lower cost to running operations in the Isle of Man.

Mike Batey, Chair of the International Employee Benefits Association for the Isle of Man, has worked for thirty years in the pensions and insurance industry. He confirms that after a strategic review the Isle of Man saw the wider opportunity in the life sector in both captive and tech for the insurance industry. He says the accelerator programme they put together was very successful and some companies have gone into commercial business. He says 63% of trust-based pension schemes are set up in the Isle of Man. He mentions a YouGov research survey they have commissioned with results being released imminently looking at thoughts from UK workers, expats, and topics like VAT.

Assisted Dying Bill

Peter Greenhill, Member of Tynwald (The Isle of Man Parliament), spoke about the Assisted Dying Bill in Isle of Man. The Isle of Man is set to become the first part of the British Isles to legalise assisted dying for terminally ill and mentally competent people, after the Parliament (House of Keys) voted by a 70% majority to pass an Assisted Dying Bill on 31 October. There will be a second vote and amendments can be made but potentially this could take effect in 2025. Guernsey previously looked at this proposal using “the Oregon model”. However, in Guernsey, the consultations required to enact the law were deemed too lengthy to continue. With ageing populations worldwide and problems like increases in dementia, it does seem though that many countries are going to have to consider this controversial topic. End of life or assisted suicide is legal in Switzerland.

Isle of Man professionals

In a beautiful building with shipping heritage sits Cains, who have c60 staff locally. The building was built by Sir William Hillary, 1st Baronet was a British militia officer, author, and philanthropist, best known as the founder, in 1824, of the Royal National Lifeboat Institution (RNLI). Tim Shepherd is Managing Director and Scott Leonard-Morgan is Director in the M&A and Restructuring sector. Cains is in a positive mood and has had a change of management and, despite selling Cains Fiduciaries Limited, an accounting business which was sold 5 years ago to First Names Group (now IQ-EQ), they will be launching a new fiduciary arm with job hiring underway. One new hire already confirmed is Paul Freeman, formerly a partner at Clyde & Co and of the Isle of Man Financial Services Authority.

Cains have a listings service (CLSL) to list bonds and equities on TISE (The International Stock Exchange Group) which is a Recognised Stock Exchange and are also working on bond deals, public markets, debt financing and employment as part of M&A and immigration.

Ramsey Crookall, an employer on the island, has another connection with South Africa with an office in Cape Town. Ramsey Crookall is the Isle of Man’s longest-established independent firm of stockbrokers and investment managers and have celebrated 70 years in business. With 60 staff, the CEO is Joanna Crookall, who is the granddaughter of the founder Ramsey Crookall and she joined the business in October 1987. Key members of staff are David Harding, Managing Director, and Tom Croft, Investment Director who heads up stock broking. If they have not been on your radar, they should be especially to see the offices which are full of art chosen by former Crookall family members.

Apex Fund Services, Isle of Man, is part of a company with its HQ in Bermuda in 2003 by Peter Hughes. Cath Griffiths is Managing Director, and her skills include tech and automation of client services. She focuses on shareholder services in terms of systems for operations. As she says they have gold standards of digital onboarding. For instance, they have an api connected to Smartsearch confirming AML data against databases like the HMRC. She says this is important because automation like this stops phishing and fraud. In 2017 Apex also acquired Deutsche Bank fund admin. Griffiths says they have developed many new services including ESG reporting particularly for the private equity business and employee services,

Apex Fund Services has doubled in size in the Isle of Man to 35 people. The business globally had 700 people and £60bn AUA back in 2016 but now has 12,000 staff and has over 1trn+ in AUA They bought and own EBD which is a banking, depositary and custody company which was founded in 1973 in Luxembourg and was a subsidiary of a Hamburg-based private bank. They now offer custody and depository in Dublin, Malta, Luxembourg, and London.

John Hunter, JDH Consultancy, who was formerly a board member at Finance Isle of Man and Head of Banking and Fiduciaries at the Isle of Man Department for Enterprise is now a NED with Cherry Godfrey who provide lending and insurance. David Cherry is CEO and set up the business with his wife, Selena in 1993 in Guernsey. With offices now across Jersey, Guernsey, Isle of Man and the Isle of Wight, the Isle of Man offices opened in 2016. Hunter has also launched a consultancy helping e-gaming companies set up banking.

Sustainability

Hunter is also working with the Manx Wildlife trust with Leigh Morris as CEO. The Isle of Man has a biosphere and in 2016, it was admitted to UNESCO’s World Network of Biosphere Reserves. They have six wildflower meadows and from May to July there are orchid fields in the Close Sartfield nature reserves. Hunter mentioned Aviva Plc who have a UK initiative to recreate temperate rain forests. The Isle of Man and North Wales are the first places where The Wildlife Trusts will begin restoring and expanding rainforests across the British Isles. It will see native tree species planted on 70 acres in conjunction with the Isle of Man Woodland Trust.

On the matter of sustainability, Ravenscroft have taken a deep dive. Greg Easton is Managing Director of the Isle of Man business and is passionate about the topic. As well as being CFA Level 4, he holds the Diploma in ESG Investment Management and the CFA Certificate in Climate & Investing. He says they are looking forward to 2040 not backward with sustainable strategies. He says hot money is coming out of energy and into agriculture and that there is a move from ‘dirty to clean’ with companies like Equinor in Norway. Equinor’s portfolio of projects encompasses oil and gas, renewables, and low-carbon solutions, with an ambition of becoming a net-zero energy company by 2050.

He also mentions the restoration of peatland, precision agriculture (agri-tech) with companies like Corteva with climate positive agriculture for food security, changes in food systems and fertilizers. He says AI will help with reporting. His other mentions include the Climate Change Act where it is the duty of the Secretary of State to ensure that the net UK carbon account for the year 2050 is at least 100% lower than the 1990 baseline. The Climate Collective which is a not-for-profit organisation that also includes a VC seed fund. The founder, Pratap Raju, was a JP Morgan banker in New York. They are developing digital infrastructure to accelerate climate action at scale.

Very relevant to the offshore community, says Easton, is the trust of trustee act 2023. Trustees’ fiduciary mandates and duties up until now have restricted them from selecting ESG or other new investments over traditional investments. It remains the case that trustees’ primary duties are to act in their beneficiaries’ best financial interests, there is now indisputable evidence that many ESG factors (most notably good corporate governance and climate risk) have a material financial impact on investments. As such, it is now being viewed as necessary for trustees of discretionary trusts to factor ESG principles into their investment decisions. He also mentions the Osmosis Resource Efficient Core Equity (ex-fossil fuels) strategy fund. ESG returns are being called into question now, but the fund is showing returns of 10.75% ytd (the first six months of the year performance was better than the latter). They exclude companies that generate more than 5% of their revenues from fossil fuels or nuclear power.

The Isle of Man is having some debate on this topic with BP’s 1982 discovery of a gas field in Manx waters now transferred to the Isle of Man government. Crogga Ltd was granted a licence to search for gas in the Manx sea to bring energy security to the Isle of Man. However, this has now stopped with more questions to Crogga when they asked to vary their licence. Critics of the drilling have said it is at odds with net-zero climate goals.

Overall, the Isle of Man has got substantial businesses and new sectors to develop. They also have plans afoot to attract economically active people to grow its population to 100,000 within the next 15 years. There are approx. 88,000 people living on the Isle of Man currently, with a fifth of those over the age of 65. It is a challenge that most countries face but the Isle of Man with its move into the captive industry; its recent green bond to develop infrastructure; its focus on nature and substantial, professional skills in the island has sown enough seeds now to reap the economic rewards in future.

A number of individuals and companies from the Isle of Man are shortlisted for the Citywealth IFC Awards, which will take place on 24 January 2024. Tickets for the IFC Awards are available now.