Bermuda Continues To Dominate Protected Cell Insurance Sector

by Amanda Banks, Tax-News.com, London

06 January 2004

Bermuda remains the number one domicile for Segregated Account Companies, according to a survey conducted last year by the Bermuda Insurance Management Association.

The results show that approximately 83 Segregated Account Companies or protected cell companies (which includes 6,234 cells within these cells) are domiciled in the jurisdiction, whilst all other domiciles are host to 126 protected cell companies combined.

Although Bermuda is a relative newcomer to this particular sector, industry representatives say that the jurisdiction has succeeded in attracting market players largely due to legislation enacted in November 2000, which has created the right environment for cell companies to thrive.

The concept of segregated accounts has been employed in Bermuda by private Acts since at least 1991. However, the government drafted the 2000 Act to establish a system of registration where segregated accounts companies may be created speedily, and with the flexibility necessary to respond to the needs of international business.

“People are obviously saying Bermuda has something that makes it more desirable than our competitor domiciles,” observed BIMA president Rory Gorman.

“There was always the worry that if a rent-a-captive somehow goes insolvent a liquidator could gain possession of the assets of a company even though it may have a good programme. Bermuda’s segregated accounts legislation states that on a liquidation, the liquidator cannot attach the assets in the cells for the use of other cells. He or she has to observe the law which says those assets and liabilities are contained cell by cell,” he added.

BIMA is an association of approximately 44 professional insurance managers in Bermuda. It exists to protect the interests of its members and their clients.

The clients under management - more than 1,200 insurance and reinsurance companies - consist mainly of captives but also include large mutuals, rent-a-captives and commercial insurers and reinsurers.

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