The Protected Cell Company (PCC) structure is a refinement of the rent-a-captive structure where businesses financially incapable of self-insuring themselves through a captive could share the services of a captive with other businesses by “renting” part of the captive capital. Through the rent-a-captive structure, unrelated companies could use the same captive to insure their risks, giving them commercial, economic and tax advantages as well as easing insurance risk management and cash flow flexibility. Additionally, the rent-a-captive structure could provide coverage of risks which are neither available nor offered in the traditional insurance market at reasonable prices. The draw-back is that claims against one company are shared among all companies that are part of the captive. To solve this issue, the PCC structure was created.
As illustrated in the figure above, the PCC structure allows businesses to set up individual “cells” within EIS, ensuring that their assets and liabilities are kept separate from others’. The insurance risk management is maintained at the highest standard by the “core” business of EIS at the same time as commercial, economic and tax advantages are kept.
The PCC structure differentiates EIS from traditional insurance companies and other providers of financial guarantees (such as banks), since EIS can ensure that no claim against one cell will be covered by the funds furnished by others. The portion of capital designated to a specific cell is neither liable for the general obligations, commitments or liabilities of EIS nor for the specific liabilities of other cells.