A “Protected Cell Captive” company is a niche insurance company owned and controlled by the sponsoring or core capital provider, which operates insulated insurance cells. Each cell is created specifically for the benefit of a client. The performance of each cell is determined by the premium and investment income earned within it, less any reinsurance, claims, and management costs. Euroguard is governed by Gibraltar’s Protected Cell Companies Act, 2001 (as amended) and this legislation specifically provides for the legal segregation of assets and liabilities between various cells in a cell captive insurance company. The adoption of the PCC legislation provided further legislative effect to the contractual cell captive agreement that Euroguard had successfully implemented since inception.
All underwriting profit generated by the protected cell is for the benefit of the cell owners and associated policyholders. The Protected Cell Shareholders Agreement demonstrates how this will be calculated and, in summary, is as follows for each insurance programme:
An Experience account is credited with:
The Experience account is then charged with:
Any remaining underwriting profit will be available for distribution as a dividend to the preference shareholder. This profit could also be retained within the cell to build insurance reserves, to underwrite the risks in future years.
The period required to be a shareholder in the alternative risk transfer market is 3 years. Through experience, we’ve seen that this is the minimum period required to see the true benefits from your risk financing programme. The shareholder agreement covers the following aspects:
On termination of the agreement, the cell owner will become entitled to a final dividend declaration equal to the retained earnings of the protected cell, assuming the business is profitable.
When the agreement has been terminated, and provided all liabilities in the protected cell are extinguished, there will be a return to the preference shareholder of all retained earnings, including amounts previously set aside for reserves, against which claims were not made.
Upon the preference shareholder satisfying all claims against their protected cell, the amount originally invested as share capital and premium can be returned to the shareholder. This is accomplished by the redemption of the shares.
We pride ourselves on being able to provide a level of control and protection greater than that usually offered by similar captive facilities. This is demonstrated by our extensive experience in managing cell captive operations worldwide. The contractual Protected Cell Shareholders Agreement entered into between Euroguard and the cell owner is backed by the statutory provisions of the PCC Act for legal ring-fencing between the cells. Where appropriate, each cell or structured programme will be protected by reinsurance.
Gibraltar is a dependent territory of the United Kingdom and, under the Treaty of Rome 1973, it forms part of the European Union (EU). Euroguard is able to access clients within the EEA directly without incurring fronting costs. This special link with the EU means that Gibraltar insurers can offer facilities and solutions offered by very few other countries.
We supply all our preference shareholders with a quarterly financial and underwriting information pertaining to their protected cell. This information will include a balance sheet, income statement, and notes thereto.
We have clients from diverse business backgrounds because we’re a fully regulated insurance company licenced to write all short-term classes of business.