Protected Cell Companies In Guernsey

This briefing note describes the key features of a protected cell company ("PCC") and summarises the formation, structure and the liquidation procedures particular to this type of company. Essentially, a PCC consists of a core and of separate and distinct cells. The assets and liabilities of one cell are segregated and protected from those of the other cells. Similarly, the assets and liabilities of the core are segregated and protected from those of the cells. For investment funds, the attraction of a PCC is the avoidance of any cross-class contagion if a class or portfolio within an umbrella fund becomes insolvent and if the creditors attempt to enforce judgments against assets within other classes. Insurance companies have found the PCC structure attractive for use by rent-a-captives, transformers and a wide range of other ART solutions. There has also been a number of CAT bond issues and the securitisation of life business within individual cells of a PCC.