Guernsey is celebrating the 20 years since the introduction of protected cell companies (PCCs).
The PCC legislation became effective for Guernsey’s captive insurance sector on 1 February 1997.
Aon’s White Rock Insurance Company PCC, established in Guernsey in 1997, was the world’s first PCC.
PCCs are now used worldwide as an alternative application for the structuring of various different types of products.
Steve Butterworth, director of insurance at the Guernsey Financial Services Commission from 1988 until 2003 and the man widely credited with developing Guernsey’s PCC concept, said: “For prudential reasons when the legislation was first drafted, the idea was to limit the use of PCCs to licensed insurance and investment companies, but we were very much aware of the myriad other possible uses.”
“I always thought that once the concept became internationally accepted its use would become widespread across financial services and that has proven to be the case, but I am still surprised at some of the areas it is not more widely used, including by institutions for mergers, acquisitions and disposals. It is an ideal piece of legislation for a banking group, especially to ring-fence assets and liabilities. As a result, there is still a lot of development and diversification to come in the area of PCCs.”
Dominic Wheatley, CEO of Guernsey Finance, added: “The fact Guernsey’s cell company concept has been copied by finance domiciles across the world, with thousands of PCCs and cells employed across the insurance, funds and private wealth sectors, is a tribute to the genius of Butterworth’s simple idea.”