Guernsey: Guernsey – King of the Cells

Last Updated: 7 July 2010
Article by Peter Niven

Most Read Contributor in Guernsey, September 2018

Originally published in Captive Review's Cell Company Handbook, June 2010.

With its history of innovation and know-how, Guernsey continues to shine as Europe's top cell-captive domicile, says Peter Niven, Chief Executive of Guernsey Finance.

In a special report at the close of last year Captive Review ranked Guernsey as the number one captive domicile in Europe and third in the world, remarking that the island is "the undisputed king of the cell captive world."

Guernsey's reputation for innovation and expertise in this field has been strengthened still further during 2010 as Guernsey-based Heritage Insurance Management achieved a worldwide first by amalgamating two Protected Cell Companies (PCCs) – with 17 cells between them – into one.

In addition, within the investment funds industry, Guernsey has hosted the first-ever conversion of a PCC to an Incorporated Cell Company (ICC) during a process which created the world's largest ICC mutual fund.

All this is a far cry from when Guernsey pioneered the cell company concept with the introduction of the PCC in 1997.

The subsequent success of this innovation is illustrated by the fact that the cell company is now used across the financial services world as an alternative application for the structuring of products. However, it is Guernsey that is the jurisdiction with the greatest experience and expertise in utilising the structure.

In addition, as well as adopting the innovative Incorporated Cell Company (ICC), the island has through legislative advancements, developed a regulatory infrastructure that enables it to be particularly widely employed. For example, in Guernsey, cell companies can be formed to conduct any business that would otherwise be undertaken through a conventional company.

The island also boasts provisions that give notable flexibility to cell-company structuring arrangements, in particular: an ordinary company can convert to a PCC or ICC; a PCC can convert to an ICC; an ordinary company can convert into an Incorporated Cell (IC) and become part of an ICC; and an IC can leave the umbrella of the ICC and convert into an ordinary company. Furthermore, Guernsey allows for inward and outward migration of companies.

It is this environment which means Guernsey is 'the king' in providing many and creative uses of cell companies, including for investment funds, structured finance products, wealth management and of course insurance.


The cell company was developed to encourage the use of captive insurance: the structure reduces the risk in captive-sharing (which is more economically viable than establishing a traditional captive), and also allows the various parts of one institution's business to be written into separate cells.

The use of a third-party cell company rather than a full-blown captive has distinct benefits which for small to medium-sized businesses in particular makes captive insurance more viable:

  • Lower operating costs
  • Less management time
  • Quicker and cheaper to set up and exit
  • No minimum capital
  • Less tax

The use of the structure as a risk-management tool has expanded to the extent that today it is also utilised in the form of:

  • Transformer cells
  • Cells converting intra-group reinsurance into third-party reinsurance (using a third-party reinsurance cell)
  • Fronting cells
  • Insurance Linked Securities (ILS), where cell companies can be used as special purpose vehicles (SPVs)
  • Fully collateralised reinsurance cells, acting in a similar way to 'sidecar' vehicles

Growing recognition of Guernsey's excellence in employing cell companies as insurance products is illustrated by the fact that there were six PCCs and 14 cells domiciled in the island at the end of 1997, but by the end of last year this had risen to 63 PCCs and 323 PCC cells (including 73 life-policy cells), as well as five ICCs and six ICC cells.

Investment funds

Cell companies are widely used for investment funds and particularly multi-strategy umbrella funds.

Traditionally, a series of separate funds would have been established under a family of funds structure. This faced the potential risk that losses attributable to one class or sub-fund may reduce or even extinguish the gain attributable to another.

Using a cell company means that individual cells can be established to run distinct investment programmes. These can be marketed under the same corporate banner but the provisions of structure mean that each cell is insulated from another. In addition, economies of scale mean that one cell company with its component parts is more cost- and time-effective to establish and run than a series of individual funds.

Mark Helyar, managing partner at Bedell Cristin in Guernsey, has recently written in MENA Fund Manager that cell companies offer great potential for addressing "two key issues arising from the financial to manage the transparency of financial instruments in the future and crucially how to prevent high-risk assets circulating in an opaque market from causing paralysis and contagion."

Structured finance

Cell companies are also being used in Guernsey as special purpose vehicles (SPVs) for securitisation programmes where series of securities are issued, and backed by distinct underlying assets.

In such transactions cells may issue a series of bonds, notes or other debt securities where the payment of principal and/or interest is funded from the proceeds of a distinct pool of underlying assets attributable to that cell.

Again, the statutory segregation of assets afforded to a cell company provides enhanced security to the usual limited recourse provisions in any underlying contractual documentation.

Wealth management

Guernsey's experience, expertise, flexibility and creativity with cell companies means that providers on the island have been able to start building a niche for their use within the wealth- management sphere, which includes private trust companies (PTCs) and family office solutions, family governance and succession planning; private investment funds; real-estate ownership; intellectual property and royalty ownership; and tax planning.


Guernsey's position as the pioneer of the cell company concept means that it has been able to develop an environment of experience, expertise, flexibility and innovation that makes it 'the king' in providing many and creative uses of cell companies, including for investment funds, structured finance, wealth management and insurance.

For more information about Guernsey's finance industry please visit

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions