GB Life Luxembourg - Luxembourg’s Advantages

With a worldwide reputation across the financial industry continually improving over the last 10 years, Luxembourg is now considered one of the major international centres, benefiting from political, economic and fiscal stability and an AAA rating (S&P’s).

Today Luxembourg is the heart of private banking in Europe, the largest centre outside the US for the management and administration of investment funds, and the capital of the pan-European cross-border life insurance industry.

A Luxembourg insurance company provides key advantages to investors:

A tax-efficient environment

Interest, income, dividends and capital gains from life insurance funds in Luxembourg are reinvested gross of taxes. Moreover, certain withholding taxes can be refunded on the basis of the broad Double Tax Treaties network (81). Although, a client’s tax situation will ultimately depend on the rules of their country of residence, the tax-exempt status of Luxembourg life insurance funds provides a strong advantage.

Europe’s strongest investor protection regime

Luxembourg legislation provides full protection to life insurance policyholders. The main advantage of this investment protection regime is the legal requirement that all investor assets be held by an independent custodian bank appointed by the life insurance company and approved by the Luxembourg insurance regulator. This protection system is known as the “triangle of security”. It ensures the legal separation of the policy assets from the insurance company’s assets, meaning that the company’s creditors have no claim on the assets of the policy. Furthermore, the custodian bank is not permitted to use the clients’ assets for any other purpose than the investment, and is bound by regulation to protect policyholders’ interests. Luxembourg’s regulations implement the European directives.

The “Triangle of Security”

GB Life Luxembourg S.A.

  • Authorised and supervised by the Luxembourg supervisory authority for insurance (CAA)
  • Deposits all policyholder assets with an independent Custodian Bank
  • Maintains a register of all assets (“Permanent Inventory”), which is submitted to the CAA on a quarterly basis
  • Maintains a safe and comfortable legal solvency margin at all times
  • Without exception, policyholder assets are held separately from GB Life Luxembourg’s assets
  • Policyholders’ assets are protected in the event of failure of GB Life Luxembourg

Commissariat aux Assurances (CAA) - the Luxembourg supervisory authority

  • Responsible for the supervision of the Luxembourg insurance industry
  • Approves the appointment of the Custodian Bank
  • Carries out regular monitoring of policyholder assets and how they are invested
  • Monitors insurance companies’ solvency
  • Has the power to issue orders to “freeze” bank accounts holding policyholder assets in custody

The Custodian Bank

  • Entirely independent from GB Life Luxembourg
  • Clients’ securities (e.g. investment funds, shares and bonds) are held in segregated accounts off the bank’s balance sheet
  • If the bank fails, these securities remain in segregated client accounts
  • Policyholders have preferential rights over the assets in the segregated accounts
  • Cash deposits are not segregated from the bank’s assets, and are potentially at risk. However, cash held in monetary funds is treated as securities and is protected
  • May delegate the custody, but maintains full responsibility for the safekeeping of policyholder assets
  • In the event of a freezing order from the CAA, no activity is allowed on custody accounts without prior CAA approval