The introduction earlier this year of Protected Cell Company legislation, permitting the setting up of companies designed to give a full legal foundation to the segregation of assets between a 'core' and various 'cells', has met considerable interest from insurance company managers and the promoters of 'umbrella' funds.
Several have been swift to use the new legislation to establish, for example, rent-a-captives, opening the captive option to a range of 'small' users previously excluded, and collective investment schemes that include classes, or cells, investing in high risk investments.
However, additional users for PCCs, particularly for insurance purposes, have been identified and are expected to lead to the formation of new types of PCCs in the near future. These uses include:
Life assurance where life insurance companies can legally separate the assets of life, pension and individual policyholders;
Composite insurers where the assets of life insurance business need to be legally separated from those of non-life business;
Association insurers where an association or similar organisation whose members share a common business interest can access insurance arrangements offering better cover and prices than in the conventional market while, at the same time, offering legal protection for individual member assets by placing them in separate cells;
Conglomerates where several cells are established, each holding a particular insurance exposure of the parent and segregated, for example, in relation to the various geographical locations, corporate division or types of risk of those exposures;
Insurance and reinsurance where insurers or reinsurers can accommodate the differing needs of clients;
Reinsurance where finite reinsurance contracts and securitisation issues can be placed within separate cells;
Multi-nationals where companies can operate their captive insurance, treasury and other functions offshore in a single entity using the same core capital.
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.
For further information contact Nigel Taylor, Director of Investment Business or Tammy Menteshvili, Deputy Director of Investment Business on Tel: +44 (0) 1481 712706 or visit the Guernsey Financial Services Commission Web Site at:
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