The Cayman Islands has published new insurance regulations affecting portfolio insurance companies (PICs) that are designed to provide more flexibility to insurance companies incorporated as segregated portfolio companies (SPCs) and to enhance the prospect of favourable US tax treatment.
As of 16 January, a SPC may incorporate one or more of its segregated portfolios by establishing them as PICs under the SPC.
Each PIC, although separately incorporated, may then engage in its own insurance business without acquiring a separate license.
The Insurance Managers Association of Cayman (IMAC) has touted numerous advantages to the new rules, namely that a PIC will now have the ability to contract with other segregated portfolios or PICs within the same SPC and have its own governing board, separate from the boards of other PICs within the same SPC.
As a separation corporation, the new PICs will also have easier acceptance by parties unfamiliar with segregated portfolios and can more easily transition to stand-alone captive status.
IMAC also said that, while there remains uncertainty over how the Internal Revenue Service treats an unincorporated SPC of an offshore insurer, a separately incorporated PIC with its own taxpayer identification number should stand “a much better chance of being permitted to make its own tax elections”.
Earlier in 2015, IMAC put the count of Cayman-domiciled captives at 759, of which 34 percent are health care captives, making Cayman second only to Bermuda in the rankings.
