Protected Cell Company. THE PROTECTED CELL COMPANY (PCC) (Incorporated in Guernsey] and SEGREGATED ACCOUNT COMPANY (SAC) (Incorporated in Bermuda]. This presentation is simply to illustrate the workings of a Protected Cell company
THE PROTECTED CELL COMPANY (PCC)
(Incorporated in Guernsey]
SEGREGATED ACCOUNT COMPANY (SAC)
(Incorporated in Bermuda]
This presentation is simply to illustrate the workings of a Protected Cell company
And does not purport to be definitive on all aspects of the PCC
It is a single legal entity
It is a company made of individual ‘protected cells’ or ‘segregated accounts’.
It has a ‘core’ capital.
Each cell or account will have its own additional capital.
The assets of one cell or account are statutorily protected from the creditors of another.
PCC - creditors of one cell can attach the assets of that cell and the ‘core’ capital. SAC – creditors of one account can only attach assets of that account and have no recourse to the ‘core’.
The Directors have a duty to inform any party that contracts with a cell that is doing business with that particular cell.
Its major advantage over the captive is that it is a simplified and more cost effective way of entering the alternative risk market.
Each Cell has a separate series of redeemable preference shares to enable dividends to be declared on its underwriting performance.
A customer enacts an Insurance policy with a Local Insurer or, where possible, directly with a cell of the PCC
The PCC is financed as per a normal Insurer under the PCC’s Jurisdiction rules
Each cell is additionally financed usually by preference shares to enable dividends to be paid.
Additional finance could be in the form of subordinated loans or other assets
Each Cell assets and liabilities are insulated from any other Cell
Securities are issued to Investors normally tranched according to risk
AAA has the lowest risk and lowest interest rate
Equity is unrated and has the highest risk and hence the highest interest rate
Similar structures exist for Collateralised Loan Obligations (CLOs)
And Collateralised Bond Obligations (CBOs)