- Cell captives, sometimes referred to a "rent-a-captives", can either be part of parent owned protected cell companies and others or rented from third parties.
- Generally, third party management company with all directors fees and running costs included in annual management fee.
- No board meetings for cell owner.
- General audit fees etc. included within annual management fee.
- Loans back available subject to solvency margins and Managers approval.
- Dividend policy strictly determined by directors of Segregated Account Companies ("SAC"), Segregated Portfolio Companies ("SPC") and Protected Cell Companies ("PCC") in conjunction with parent's wishes.
Cell Captive Benefits
Captives are formed for a variety of reasons, of which the following are the most common:
-
increased awareness of risk management;
- reduction or stabilisation of the cost of insurance;
- lower expenses compared to traditional risk transfer/insurance companies;
- credit for good claims experience;
- insuring the uninsurable; and
- direct access to the reinsurance market.
Other advantages of forming a captive or are: creation of a profit centre; less onerous yet responsible regulatory framework, better control of multinational covers; additional capacity; managing group retention levels; and some potential taxation benefits.
How to Set up a "Cell Captive"
- Select "Cell Captive" type - risk bearing or non-risk bearing
- Select Manager
- Discussion with underwriter and reinsurers regarding limited recourse
- Complete Management and Cell Agreements
- Complete cell application form
- Submit business plan and application forms to regulatory authority
- Regulatory body issues license
- Capitalise Cell
- Cell commences operation
