Dr Boris Reichenauer, founder of Mauritius-based Structured Investment Linked Insurance Business (SILIB), shared in mid-April how Shariah-minded investors could benefit ethically from price fluctuations resulting from the blockade on the Strait of Hormuz which is critical for the shipment of energy, fertilizer and other key global resources.
We are serializing the interview, minuted by Dr Reichenauer, who speaks of the concept of a “Takaful hedge” for the Strait of Hormuz, one of the world’s least understood assets. Part 1 is featured below.
Q: With Dubai’s perceived stability under pressure from the Hormuz blockade, we are seeing a shift in asset-holding hubs. How does a Mauritius-based SILIB structure provide a legal “firewall” for GCC families that a DIFC or Singapore-based foundation might not offer in the current climate?
A: The question is structural, and the answer comes down to what creditors can actually reach. A DIFC Foundation is a legal entity. It holds assets in its own name, and the Foundation Law provides meaningful separation — but it is still a legal person that can be sued in the DIFC Courts.
DIFC
Under the DIFC Foundations Law, a transfer of property to a Foundation can be declared void if the Founder intended to defraud a creditor and the transfer rendered the Founder insolvent. The limitation period for such challenges is three years.
There is no statutory creditor exclusion — the firewall relies on legal separation, not on a prohibition of enforcement. And critically, if the Founder retains significant control over the Foundation — which is common in family wealth structures — there is a well-documented “sham risk”: courts may look through the structure and treat the Foundation’s assets as belonging to the Founder.
Singapore
For private wealth, Singapore relies on:
- Trusts (under the Trustees Act 1967) — the dominant structure.
- Variable Capital Companies (VCC) — corporate fund vehicle, no creditor protection
A Singapore trust operates on similar logic like a DIFC Foundation. The settlor transfers assets to a trustee — again, a gratuitous transfer without consideration.
Singapore’s Trustees Act provides firewall provisions under Section 90, and trust duration is unlimited. But the trust remains vulnerable to the same structural weaknesses: fraudulent transfer challenge, sham risk if the settlor retained de facto control through reserved powers or a letter of wishes, and recognition failure in civil law jurisdictions that do not recognise the trust concept.
Only 14 countries have ratified the Hague Trust Convention. A Singapore trust means nothing in a civil law court in Riyadh or Dubai outside the DIFC.
A Singapore Variable Capital Company is a corporate fund vehicle governed by the VCC Act 2018. It offers flexibility for fund managers and segregation between sub-funds under an umbrella structure, but it was designed for collective investment schemes, not personal wealth protection.
There is no inherent creditor protection for the beneficial owner. The VCC can sue and be sued, and its insolvency provisions are adapted from the Singapore Companies Act. To achieve asset protection comparable to a trust or insurance wrapper, a VCC investor would need a separate trust or foundation layer on top — which adds cost, complexity, and additional jurisdictional risk.
Mauritius
The Mauritius SILIB operates on fundamentally different legal mechanics. It is an insurance contract, regulated under the Insurance Act 2005 and the SILIB Rules 2022, supervised by the Financial Services Commission.
When assets are placed inside a SILIB policy, legal ownership transfers to the insurer. The policyholder retains a contractual claim against the insurer — not an ownership interest in the underlying assets. This is not a semantic distinction. It means that a creditor of the policyholder cannot execute against the assets themselves, because the assets do not belong to the policyholder. They belong to a licensed, FSC-regulated insurer and also protected by law, in case of a bankruptcy of the insurer.
Liechtenstein layer
Add the Liechtenstein governing law layer (under Freedom of choice of Law), and the protection becomes statutory.
Article 78 of the Liechtenstein Law provides that where the spouse or descendants of the policyholder are named as beneficiaries, neither the insurance claim of the policyholder nor the beneficiary shall be subject to enforcement or bankruptcy proceedings. This is automatic — no court order required, no carve-outs for pre-existing creditors.
The contestation window under Article 65 of this law is one year — compared to three years under the DIFC Foundations Law.
The SILIB Rules 2022 add a further layer: mandatory per-policyholder custodian segregation. Each policyholder’s assets sit in a segregated custodian account, ring-fenced from the insurer’s own balance sheet and from other policyholders. The legal frameworks are fundamentally different.
When a settlor transfers assets to a foundation or Trust, it is a one-directional, gratuitous transfer. The settlor gives up ownership and receives nothing in return. In jurisdictions with gift tax, this transfer could be treated as a gift — with immediate tax consequences. The assets now belong to the foundation or Trustee, but the transfer itself creates the very evidence a creditor or tax authority needs to challenge the structure.
SILIB advantages
A SILIB operates on entirely different legal mechanics.
The client enters into an insurance contract with the insurer. This is a bilateral agreement: assets or cash are transferred to the insurer in exchange for defined contractual obligations — capital investment management and death benefit protection. There is a genuine exchange of consideration on both sides.
This distinction has three consequences that matter:
- First, the transfer to a SILIB is not a gift. It is the payment of a premium under a contract for services. This means no gift tax, no gratuitous disposition analysis, and no presumption that the transfer was made to defeat creditors.
- Second, the insurer becomes the legal owner of the assets. The policyholder retains a contractual claim — not ownership. A creditor of the policyholder cannot attach property that belongs to a third party (the insurer).
- Third, the foundation remains a legal entity that can be sued, wound up, or pierced. The insurance contract is not a legal entity. It is a bilateral obligation between two parties, governed by insurance regulation, supervised by the FSC, and — where Liechtenstein governing law applies — protected by Art. 78 EO as a matter of statute.
A foundation separates assets through legal drafting. A SILIB separates assets through the architecture of the instrument itself: a contract with consideration, not a gift without it.