Nov 2025
Are you or your client considering writing third party (re)insurance business within a Cayman Segregated Portfolio Company insurer (SPC) and currently debating whether a segregated portfolio (“Cell”) or a Portfolio Insurance Company (PIC) is the more suitable structure? In the table below we set out some of the key considerations to think about in deciding which might work best. Overall, both a Cell and a PIC achieve statutory ring-fencing of assets and liabilities, but they differ materially in legal personality, governance, regulatory capital, exit options and set-up logistics. For some third-party business a Cell may be more suitable whereas in other circumstances a PIC may be the better choice. Of course, a mix of both Cells and PICs within a single SPC is always possible.
| Relevant consideration | Cell | PIC |
| Nature of Structure | A constituent part or account of SPC, similar to a division of a trading company, and not a legal entity in its own right. | A separate legal entity from SPC but always connected to SPC by virtue of the fact that as a matter of Cayman law, PIC must at all times be under the voting control of SPC. |
| Legal Capacity | As Cell is not a legal entity in its own right, it can only contract and enter into transactions through agency of SPC acting on its behalf. So, one drawback is that Cell cannot contract with other Cells of its SPC. | As a separate legal entity, PIC can contract and enter into transactions in its own right like any other company. This allows each PIC to contract in its own name, sue and be sued, and own assets and assume liabilities independently of other Cells and PICs and the SPC itself. PIC can contract with other PICs and Cells of its SPC. |
| Limited Liability | A creditor of Cell only has recourse to assets of Cell and not to remainder of assets of SPC and its other Cells and/or PICs. Likewise, a creditor of Cell has no recourse to assets of SPC’s shareholders. | A creditor of PIC only has recourse to assets of PIC and not to assets of SPC and SPC’s Cells and/or other PICs. Likewise, a creditor of PIC generally has no recourse to the assets of PIC’s shareholders or SPC’s shareholders. |
| Control | Because Cell is a constituent part or account of SPC, it is by definition under the control of SPC. | Under Cayman law a PIC must always be under the voting control of SPC. This is primarily to ensure a level of regulatory oversight of PIC by SPC. |
| Economic Ownership | Complete flexibility with economic ownership – generally achieved by SPC issuing non-voting participating shares in respect of Cell to whoever is to be economic owner of Cell. Even though SPC controls Cell it does not have any economic participation in Cell. | Complete flexibility with economic ownership – generally achieved by PIC issuing non-voting participating shares in PIC to whoever is to be economic owner of PIC. Even though SPC controls Cell it does not have any economic participation in Cell. |
| Governance | SPC’s board of directors remains responsible for the governance of all Cells. The creation of a new Cell may require updates to governance policies, risk management frameworks and internal controls. Cell does not have its own board of directors or equivalent body. | Authority and responsibility for governance of PIC is with board of directors of PIC rather than board of directors of SPC, with the PIC board responsible for regular board meetings, documented policies and ongoing review of governance practices. |
| Perceived Independence | As mentioned above, Cell does not have its own board of directors or equivalent body. A third party may be uncomfortable without separate board or entity and may find Cell concept unfamiliar. | SPC has voting control of PIC and board of directors of SPC have oversight responsibility i.e. akin to relationship between board of directors of a parent company and board of directors of a subsidiary company. Ability of PIC to have its own board of directors can often be seen as a positive factor for a third party when comparing PIC with Cell. |
| Composition of Board of Directors | Board of directors of SPC will remain unchanged despite the formation of a cell owned by a third party. | Board of directors of PIC can be same composition as board of SPC or completely different. Typically, composition will be mix of SPC representatives and representatives of third party economic owner of PIC. Who makes up the majority depends on commercial appetite/demands. |
| (Re)insurance Business Written | Cell will be able to write whatever (re)insurance business is outlined in its business plan approved by CIMA. Its authority to do so stems from the insurance licence held by SPC. | PIC will be able to write whatever (re)insurance business is outlined in its business plan approved by CIMA. Its authority to do so stems from its registration with CIMA as a portfolio insurance company under the control of SPC, a licensed insurer. |
| Regulatory Capital | Under Cayman law no specific regulatory capital requirement for a Cell. Only requirement is that Cell must always be solvent on both a balance sheet basis and going concern basis. Nevertheless, impact of new Cell’s business on overall regulatory capital requirements of SPC will need to be assessed. | PIC is subject to its own regulatory capital requirements in addition to SPC’s regulatory capital requirements. |
| Timescale for Set Up Process | From “green light” to proceed to completion of all legal and regulatory steps (including CIMA approval process) – approximately 8 weeks | From “green light” to proceed to completion of all legal and regulatory steps (including CIMA approval process) – approximately 12 to 14 weeks. |
| Looking to the Future | If business successful and third party wishes to reconstitute as own stand-alone captive unrelated to SPC, can definitely be done but more cumbersome than with PIC because of need to novate programme assets and liabilities and for third party to set up its own licensed insurer to accept novation of programme. As a “halfway house”, Cell could convert to a PIC under SPC with Cayman statute including provision for a smooth transition without need for a novation If business unsuccessful and third party wishes to close down Cell, there would obviously be a run off or commutation and final distribution and at end of process Cell terminated. |
If business successful and third party wishes to reconstitute as own stand-alone captive unrelated to SPC, much less cumbersome than for Cell because PIC can transition to a licensed insurer and there is no change in entity. If business unsuccessful and third party wishes to close down, there would obviously be a run off or commutation and final distribution but at end of process there would have to be a formal winding up process of PIC. |
| Scalability | Once having developed the first third party Cell, with a streamlined operating model and standardised documentation, the “product” lends itself well to being developed for other third parties and so achieving a level of scalability. There is no legal or regulatory limit to the number of Cells SPC may have. | Same as with Cell including no legal or regulatory limit to the number of PICs SPC may have. |