Insurers formed as segregated portfolio companies
(SPCs) can now look forward to enjoying the
advantages of portfolio insurance companies in the Cayman
On 25 March, the Cayman Islands' Legislative Assembly passed
a Bill which amends the Insurance Law (2010 Revision), to enable
insurers formed as SPCs to take advantage of similar benefits as
incorporated cell companies in other jurisdictions like Jersey and
Pursuant to the amendments, a new or existing SPC insurance
company is able to incorporate one or more of its segregated
portfolios by establishing a "portfolio insurance
company" (PIC) under the SPC. The PIC would
then undertake the relevant insurance business, which would
normally be carried out by the segregated portfolio.
The PIC will not need to be separately licensed as an insurance
company, and, unlike a traditional segregated portfolio, the PIC
will be incorporated as a separate legal entity - i.e., an exempted
company limited by shares.
The main advantages of the PIC, in comparison to
a segregated portfolio of a SPC, are:
the ability to contract with other PICs within the same SPC -
which facilitates reinsurance, quota sharing and pooling (which
simple segregated portfolios of SPCs presently cannot do);
each PIC is a separate legal entity (a segregated portfolio of
SPC is not) with its own board of directors which permits
governance flexibility and there is less risk of comingling
for parties unfamiliar with segregated portfolios, a PIC may be
more readily accepted; and
a single PIC can be wound up with no effect on its controlling
SPC or other PICs.
The Cayman Islands Government, taking advice from the Financial
Services Legislative Committee and the Insurance Managers
Association of Cayman, proposed this legislative model because it
will operate easily within fundamental and well-established
principles of corporate law.
The PIC entity will increase the competiveness of Cayman and
this legislation is a welcome addition to the thriving Cayman
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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