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.