Insurance boss David Kneeshaw says he recognises the vital role of an established island business which his company is in the process of buying for £340m.

Around 150 people work for Friends Provident International in Castletown.

In July it was announced International Financial Group Ltd, the holding owner of the RL360 brand, based in Cooil Road, Douglas, had reached an agreement with the Aviva Group to acquire FPIL, subject to regulatory approval.

In a wide-ranging interview with Business News Mr Kneeshaw has spoken of the importance of the Castletown company as final preparations are made for the handover in the major acquisition.

He has also spoken out about the challenges facing the island’s financial services industry.

He revealed he has made approaches to the island’s government as work continues to ensure advisers around the world don’t take ‘the easy option’ of going to ‘dodgy jurisdictions’ instead of the island.

Speaking from his office at RL360 chief executive Mr Kneeshaw said it was still ‘early days’ but he thinks the acquisition is ‘great news’ and ‘positive’ for both Castletown and the island.

He stressed there is a defined process to go through when buying an insurance company which means it could be after the new year before RL360 can be announced officially as the new owners of FPIL.

‘Clearly the regulator (the Financial Services Authority, FSA) has to be happy that company A buying Company B is going to work.

‘Have they got a credible business plan or structure?

‘What is their plan and what are they going to do with the business?

‘There are all sorts of aspects involved in this with the FSA.’

Mr Kneeshaw said that theprocess generally takes several months. He believes it may not be until January before the full deal is completed and FPI finally has its new owners.

Mr Kneeshaw said there had been a ‘very positive’ reaction since thenews broke about the takeover.

Mr Kneeshaw said there were 18 different workstreams working on aspects of the takeover. Asked if the name FPI will stay the same he said that one was one of the things being looked at.

‘There are loads of big decisions to make not least the management structure.

‘We have an idea what the business will look like.’

Home for RL360 and FPI is the Isle of Man

Mr Kneeshaw told Business News: ‘I am prepared to make some general statements:

‘The home of RL 360 is the Isle of Man

‘The home of FPI is the Isle of Man.

‘The combined business will have its home here.

‘Can I stand up today and give an exact decription of every single job? No and nor should I until I have spoken to staff.

‘But I’m confident I can say that people can look at this as a positive for the island. These are two Isle of Man businesses and the holding company for both is based in the island as well. (International Financial Group Ltd)

‘I believe categorically that the Isle of Man should stay as an important hub for this combined entity. I can also say with reasonable certainty we will need both buildings and this I know is very important because it is a major employer in Castletown.

‘So if you were to ask me: Are we going to close this building [at Cooil Road] or close [the building in] Castletown I’m not going to guarantee it but I’m going as close to guaranteeing that we won’t as I can possibly be. I think, and I’m pretty certain that my team thinks, we need both buildings. And that both buidings and sites are going to be important to us.

‘It is great news and I think it is going to be positive for the island.

‘It’s a big site in Castletown and how we make that work, obviously we are going to drill down in to the detail and some of that will involve talking to Friends Provident about how they think things are going to work - its not just down to me.

‘The FPI managers will be involved in that process.

‘I’m pretty confident I can say both sites are important to us and will be for some time to come. That is important news, particularly for Castletown.’

challenges ahead

Mr Kneeshaw also spoke of how he sees the future for the financial services industry generally in the island.

He said: ‘We are at an interesting stage where we have new regulations coming in and we now know they will come in in January 2019.

‘I’m fairly in favour of those regulatory changes which will broadly cover the advisers we work with, the funds that advisers can recommend and transparency of charging structures. These are the core areas and I think those are all good news.’

But Mr Kneeshaw says there are issues to overcome if the island is to continue to be successful.

dodgy jurisdictions

‘We will have to persuade the adviser community that the Isle of Man stands for something positive and that advisers don’t feel the easy option is to go to dodgy jurisdictions that don’t have good regulations and governance.

‘So the risk for the Isle of man is that good governance leads to some advisers taking the easy option and going elsewhere for their business, to countries such as Cayman or Mauritius which do not have proper governance and in my view could be seen as dodgy jurisdictions.

‘I think we need to make sure that advisers and customers understand the benefits of going to a well regulated strong jurisdiction where clients’ money is safe.

‘So I think the government and the industry have to work together to make sure that education takes place prior to January 2019. Otherwise there is a risk that we will lose business in 2019 to other jurisdictions. Other than that I am supportive as long as we do this education job well and the government has to be involved during 2018.’

Mr Kneeshaw said he is actively engaging with the government.

‘The government know my views on this . The government know I believe education is crucial to avoid business drifting away and from the Isle of Man to dodgy jurisdictions.’

Mr Kneeshaw explained that January 2019 would see the conduct of business rules specifically being written for insurance companies.

‘It’s about insurance companies making sure they have done a bit of due diligence on the adviser firms they do b usiness with.’

Mr Kneeshaw said another step is that retail customers ‘who account for 95 to 99 per cent of our customer base’ should be only going into funds that are suitable for retail investors and not experienced investors .

transparency

And clients should have transparency over the charging structures ‘so they know what commision is going to the adviser etc etc.’

Mr Kneeshaw stressed: ‘We agree with all those things.

‘We want them to happen but we want the government to support the industry in making sure there is a good education programme in particular so that advisers don’t find themelves using dodgy jurisdictions. This good education programme is urgent and must start at the beginning of next year.

‘The government knows my opinion and I won’t say who I have spoken to and made my opinions clear. I’m convinced the government know they have to be supportive.’

educated

Mr Kneeshaw told Business News: ‘Advisers need to to be educated and persuaded.These advisers are all over the world.’

He concluded: ‘I’ve spoken to a number of people across government.

‘I just think the government in its broadest context understands it needs to support in parallel with the regulations and the education.

‘I’m very happy to support the regulations but I want to know we are getting help to persuade people to come here [for insurance]’

As reported in Business News last week RL360 has been nominated for Best International Life Group (Non UK), Best International Protection Plan (Life) and Best International Trust and Estate Planning Product at the forthcoming International Investment Fund and Product Awards. Mr Kneeshaw said: ‘Sometimes being a leader requires doing the ‘‘right thing’’ rather than the ‘‘easy thing’’ and the Isle of Man has pointed the way for other jurisdictions to follow.