The Conyers insurance team regularly assists clients looking to convert their licensed insurer into a segregated portfolio company (“SPC”) in order to separate their programs by cedents or lines of business into segregated portfolios (“SPs”), as well as the establishment of portfolio insurance companies (“PIC”) into which insurance programs originally written in SP are transferred. What is now becoming more common are PICs “cutting the cord” with their controlling relevant insurers and becoming standalone licensed entities.

We explore this process in more detail in this article. For general background information on SPCs and PICs check out the following links to our briefing papers on SPCs, PICs and to our explanatory video on PICs.

A significant benefit of the PIC product has always been the ability of a sponsor/group to utilise a PIC to dip its toe into Cayman regulatory waters and get a feel for running its own (re)insurer without the fulsome regulatory burden of obtaining a standalone insurer licence. A key premise of the PIC structure is that the voting shares of a PIC must be held by a licensed SPC insurer for and on behalf of a relevant SP. Pursuant to this control function, a PIC is “registered” (as opposed to licensed) with CIMA and effectively permitted to carry on insurance business under the SPC’s insurer licence, which can be an efficient and cost effective means for a client to obtain an underwriting platform which offers them more control than a standard a rent-a-cell scenario.

Given the passage of time since its introduction in 2015, the PIC product is now maturing and having obtained operational exposure to ongoing Cayman regulatory requirements, such as annual audits and board meetings, some PIC sponsors are now confident moving from the safety and control of functioning under their controlling SPC licenced entity and instead branching out as standalone licensees.


Owing to a pre-existing registration with CIMA, an application to elevate to a standalone licensee is a more straightforward process than starting anew. Notwithstanding, the following should be considered:

  1. the entity will need to remove ‘PIC’ or ‘portfolio insurance company’ from its name;
  2. the client will need to determine whether they are happy to keep the existing ordinary and participating dual share class structure applicable to a PIC, or whether they want to consolidate the ownership into a single share class. The former is simpler while the latter more complicated as it will involve a share restructuring which could potentially have onshore tax consequences;
  3. if the client decides to keep the dual share class structure, then the ordinary voting shares currently held by the SP of the applicable SPC would probably be best transferred for nominal consideration to the current holder or holders of non-voting participating shares so that both share classes are owned by same person or persons;
  4. an application will need to be prepared for submission to CIMA covering/including items such as:
      1. the class of insurer licence being applied for;
      2. a structure chart detailing the new ownership structure and change of control;
      3. a revised business plan;
      4. details as to whether the board of directors will change, be supplemented or officers appointed and the related diligence materials that will be required to be provided to CIMA in connection with such changes;
      5. financial projections;
      6. an amended and restated memorandum and articles of association to reflect, amongst other things: the name change; the removal of any PIC specific provisions; and any restructuring of the share capital (as mentioned above);
      7. details or confirmation as to other potential impacts on the operation of the entity.

Steps Required

Once CIMA has approved the application to convert a PIC to a standalone licenced entity, a number of corporate steps will need to be taken to complete the conversion. Such steps include:

  1. Possible share repurchases/redesignations at the PIC and SPC level;
  2. Termination of the SP created at the SPC level to hold the voting shares of the PIC; and
  3. Amend and restate the M&A for the PIC post-conversion and change the name.

While it is a positive development to see the maturation of the PIC product, it is important for clients to consider the operational and regulatory requirements that apply to standalone licensees, as well as the procedural approvals that need to be navigated before a PIC can elevate to a standalone licensee.

If you or your client is considering converting their PIC to a standalone insurer, or you would simply like to know more about the benefits of the PIC product, please reach out to your usual Conyers contact.


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