Chris Johnson, business development director, Aon (Gibraltar)
Johnson began by defining protected cell companies (PCCs): "The concept of a PCC is simply that you have one legal entity, with a series of different cells, each of which is a separate unit within the PCC."
He said PCCs allow companies to separate their assets legally. Johnson added: "Companies usually set up with two classes of shares: core shares that are owned by the sponsor of the overall PCC - these would usually be voting shares; and a series of cellular shares that are usually issued with a nominal share value".
PCCs can be used in three ways:
• Writing portfolios of business
• Fronting programmes of insurance and reinsurance
• Affinity group customer insurance.
The advantages of PCCs include:
• Rapid and low cost set-up
• Minimal management time
• Lower level of capital
• Possibility of acting as incubator cell for standalone captives.
But there are disadvantages:
• Relative lack of control (no voting rights)
• Could affect branding.