The long-awaited portfolio insurance company legislation is now in force.
Those familiar with the Cayman Islands segregated portfolio company (the ‘SPC’) will note that an SPC is one legal entity irrespective of the number of segregated portfolios created. This means that segregated portfolios forming part of the SPC cannot contract together. Many offshore jurisdictions have sought to overcome this obstacle by introducing legislation to specifically provide that segregated portfolios within the same segregated portfolio company can contract together. Through the portfolio insurance company legislation, the Cayman Islands offers its own solution to the perceived limitations of the traditional SPC structure.
What is a portfolio insurance company?
The portfolio insurance company legislation permits a segregated portfolio licensed insurance company (an SPC insurer) to establish, for the account of a segregated portfolio, an exempted company limited by shares as a subsidiary. This is nothing new but significantly, upon an application in writing to the Cayman Islands Monetary Authority (CIMA) to register the exempted company as a portfolio insurance company, the portfolio insurance company is permitted to carry on insurance business without requiring a separate insurance licence…