Insurance-linked securities services specialist Horseshoe Group has expanded its operations to Gibraltar.

The firm’s move comes after Gibraltar finalised its own ILS guidelines, launching its own bid for market share in the booming sector.

Horseshoe, led by founder and chief executive officer Andre Perez, has formed Horseshoe Management (Gibraltar) Ltd to participate in the new market in the Crown Dependency off Spain’s southern shore.

Horseshoe was founded in 2005 in Bermuda, which has dominated the ILS sector in recent years. Mr Perez sees the Gibraltar operation as a platform for European expansion.

“At the moment, the ILS market is dominated by US wind and earthquake perils and for it to truly grow, it will have to not only expand the perils but also the geographical regions it covers,” Mr Perez said.

“My sentiment is that a good percentage of the growth is going to come from Europe. This is why I am quite bullish about Gibraltar’s potential for ILS.”

ILS, such as catastrophe bonds, are the chief conduit for convergence of the capital markets and the reinsurance industry. The influx of “alternative capital” is coming from investors including pension funds, seeking healthy yields from investments uncorrelated with the financial markets. ILS now claims around one fifth of the catastrophe reinsurance market, according to broker estimates.

Mr Perez, who has been in the thick of the sector’s growth in Bermuda, was heavily involved with the formulation of Gibraltar’s ILS framework.

“The formation of Horseshoe Management Gibraltar follows months of work alongside government officials, representatives of the FSC (Gibraltar’s insurance regulator), local service providers and most notably a working group of leading ILS bankers, service providers, investors and sponsors put together by Horseshoe CEO Andre Perez in conjunction with HM Government of Gibraltar’s Ministry for Financial Services,” Horseshoe stated.

“The working group assisted the FSC in finalising their ILS guidelines enabling Gibraltar to be open for ILS business within just four months.”

Horseshoe is also licensed in Ireland. “The establishment of Horseshoe Management Gibraltar will now give us more flexibility to manage ILS transactions in either European domicile depending on the clients’ preference,” Mr Perez said.

Gibraltar’s Financial Services Minister Albert Isola said: “I am delighted to welcome Horseshoe to Gibraltar following its regulatory approval by our Financial Services Commission. Andre and his team at Horseshoe have provided us with invaluable technical expertise and market knowledge together with the specialists in the Working Group that he coordinated and their decision to set up in Gibraltar is especially welcome.

“We are keen to establish Gibraltar as a European ILS jurisdiction and this is an important and significant next step.”

In June, Mr Isola led an eight-strong delegation from Gibraltar to explore possibilities for the two jurisdictions to work together.

At the time, Mr Isola told this newspaper: “Gibraltar is offering Bermudian-based businesses that wish to operate in Europe our unique proposition, among the British Overseas Territories and Crown Dependencies, of access to the European Union single market via a Gibraltar insurance licence.”

Horseshoe said the Gibraltar operation would focus on attracting European sponsors and cedants for ILS structures such as catastrophes bonds, sidecars and collateralised reinsurance transformers,

Mr Perez added: “Gibraltar has a lot going for it as a suitable ILS jurisdiction, aside from being an EU domicile, it has now a strong ILS regulatory and tax framework, a good infrastructure, competent service providers, Protected Cell Company legislation and more importantly the strong commitment from both Government and the FSC to make Gibraltar a thriving ILS European domicile.

“We are excited to have established a presence in Gibraltar with Horseshoe Management Gibraltar and we look forward to working alongside the collective willingness of those in Gibraltar to make ILS a success on ‘the Rock’.”