There is little doubt that cells have been where the majority of new insurance vehicle applications and set-ups have been in Guernsey over the past few years.
Evolution PCC can help you in many different areas.

The global success of Protected Cell Companies (PCCs) has increased the range of options available to clients with the success of third party sponsored PCCs set up to enable client participation in the ownership and use of protected cells for conducting insurance and reinsurance business.

 

Protected cells have traditionally been used both as a means of facilitating captive type business in a lower cost structure and also as a means of fronting to offer access into the reinsurance markets for reinsurance arbitrage opportunities. Cells share the running costs of the PCC and so are more cost efficient than having a wholly owned subsidiary, although increasingly it’s the fact that cells take up less management time at parent company level (by for example not having to come to Guernsey for regular Board meetings) which is making them more attractive than a captive to some companies. Other cell uses include a risk taking vehicles for Managing General Agents wanting a vehicle to participate in their own risks.

 

Having made the decision that your company would benefit from a captive insurance structure, you are then left with the decision as to which type. The evolution of the captive structure to the creation of the various Cell structures has considerably enhanced the already appealing reasons to move from the traditional insurance market. The development of the Protected Cell Company (PCC) brings with it enhanced benefits from those seen in a traditional captive structure.

 

With the legislation for PCCs first introduced in Guernsey in 1997, Guernsey has led the way in PCC advancement ever since. Conceived as a corporate entity in which separately identifiable cells are created for the same or separate cell users, a PCC in effect offers complete autonomy of the business being conducted within individual cells. The benefits of Evolution PCC protected cell ownership above and beyond the traditional reasons for having a captive are as follows:

SPEED UP OF SET UP AND EXIT

As Evolution PCC is already in existence the creation of a cell is a less formal and therefore less time consuming process than setting up a newly incorporated captive vehicle. Similarly on closure of a cell, as a cell is not a separate legal entity in its own right, then there are no formal liquidation procedures to undertake, so once all insurance liabilities have been extinguished a cell can be closed very quickly in comparison to a company liquidation and without the costs of that liquidation exercise.

MODERATE SET UP COSTS

The fact that the cell set-up process is less cumbersome and therefore less time consuming means that cell set-up costs are consequently reduced. There are no legal incorporation costs for a protected cell and Regulatory application fees in Guernsey are also less than a third of those charged for a full captive vehicle.

REDUCED ANNUAL MANAGEMENT COSTS

Once a cell is up and running then it also benefits from participating in the shared costs of Evolution PCC as a whole, such that significant savings are available on expenses including audit fees, regulatory costs and Non-Executive Director fees when compared to a stand-alone captive vehicle. As managing protected cells within Evolution PCC is more efficient for Robus than the work associated with managing individual captive companies, then cell captive management fees are also significantly less than those being charged to manage a full captive.

REDUCED PARENT COMPANY TIME

Increasingly it’s the fact that cells take up less management time at parent company level when compared to owning a captive which is making them more attractive to some companies. For example parent company representatives do not have to take the time away from the office to come to Guernsey for regular Board meetings as Evolution PCC has an existing Board which cell owners do not sit on. An annual cell strategy meeting might be held instead to offer the parent company strategic input into the direction of the cell but it’s not mandatory.

FLEXIBLE CAPITAL REQUIREMENTS

There is no minimum capital requirement for a cell of Evolution PCC because the minimum capital requirement is already met by Evolution PCC as a whole. This means that a protected cell being set up in Guernsey which in turn is fully reinsured for its maximum liability could be set up with effectively no capital due to the 100% allowance for reinsurance offered by the Guernsey Financial Services Commission. This means that protected cells make very efficient reinsurance arbitrage vehicles.