CAPTIVEINSIGHT
SPC with PICS
PARTICIPANTS
CORE
CELL A
CELL B
CELL C
PIC A
PIC B
PIC C
Hybrid SPC
PARTICIPANTS
CORE
properly established and operated cell
structure, there is no doubt that a PIC
will benefit from well-developed case
law supporting corporate limitation
of liability.
CELL A
CELL B
CELL C
PIC A
Regulation
A PIC will be regulated by CIMA but
as long as it remains a PIC it will not
need its own insurance licence. Instead
it will operate under the umbrella of the
licence held by the SPC insurer which
controls it. The legislation provides for
a straightforward registration process
with CIMA for each PIC.
The level of regulatory oversight that
CIMA will have over a PIC will be
largely the same as for a cell. So, for
example, audited financial statements
reflecting the financial condition
of each PIC will need to be filed
with CIMA.
However, the ability for a PIC to
simply be registered with CIMA only
applies as long as the PIC is whollyowned by the cell of a licensed SPC
insurer. So, for example, if a PIC
were to be transferred to a third party,
perhaps as part of becoming a standalone captive, the PIC would have to
obtain its own insurance licence and
could not continue writing insurance
business until it did so.
Only a cell – or strictly the SPC acting
on behalf of a cell – will be able to
hold the voting shares in the PIC.
In this way, the PIC will at all time
be controlled by the SPC through a
22
cell and hence why it is appropriate
for the SPC insurer’s licence to
extend to each PIC established by
the SPC insurer.
filing with CIMA a straightforward
declaration sworn by two directors
of the SPC containing certain
prescribed particulars and obtaining
creditor consents.
Establishing the PIC and
Automatic Novation
New Business Opportunities
The incorporation of the PIC will be
the same as any incorporation in the
Cayman Islands – a 24 hour process
once the necessary due diligence/
know your customer information has
been provided on the directors and
principals. The registration of the PIC
with CIMA will be largely the same
as the current procedure for creating
a new cell for an SPC. Creating a cell
generally takes just a matter of a few
days, with the principal step being the
filing of a business plan for the new
cell with CIMA.
In developing the Amendment
Law one of the issues that had to
be considered was the need for a
streamlined process for novating the
assets and liabilities of an existing
cell program to the underlying PIC.
This is addressed in the Amendment
Law by providing for an automatic
novation by operation of law by simply
Discussions
with
clients
and
consultants in Cayman and the U.S.
point to the fact that the ability to set up
PICs will bring new insurance business
to Cayman which might otherwise have
been lost to other domiciles. Therefore,
PICs should provide an important new
revenue stream for CIMA and the
Cayman Islands government and help
in maintaining Cayman’s position at
the cutting edge of developments in
alternative risk management.
T: +1 345-949-0488
E: [email protected]
W: www.solomonharris.com