Wednesday, July 25, 2012
The Cayman Islands Financial Services Authority has announced the launch of a consultation on a Bill to amend the Insurance Law to allow insurers formed as segregated portfolio companies (SPCs) to enjoy the same benefits as incorporated cell companies in other jurisdictions.
Under the change, a new or existing insurance SPC would be able to incorporate one or more of its segregated portfolios (ie. cells) by establishing a 'portfolio insurance company' (PIC) under the cell. The PIC would then conduct the relevant insurance business, instead of the cell. However, while the PIC would be regulated by the Cayman Islands Monetary Authority, the PIC would not need to be separately licensed as an insurance company. Unlike a traditional segregated portfolio cell, the PIC would be a separate legal entity, i.e. an exempted company limited by shares.
There are numerous advantages of a PIC, as compared with a cell of an SPC, including:
The Cayman government, with advice from the Financial Services Legislative Committee, decided that such a model would be more robust in comparison to structures available in other jurisdictions. The Cayman Islands government believes the proposals will boost the islands' competitiveness, as the model will provide cost benefits to insurers, and be more efficient and cost-effective than introducing standalone incorporated cell company legislation in the Caymans.