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Segregated Cell Captives To Boost Bermuda Insurance

Tax-news.com

24 October 1999


Bermuda is proposing to introduce new "segregated cell" laws for captive insurers in an effort to boost its insurance industry.

Similar legislation has already been implemented in the Cayman Islands resulting in positive new business growth and forcing Bermuda's insurance industry to play catch-up.

Segregated, or protected, cells allow insurance companies to shield an individual account for a particular policy, group of policies or client, from the general business of the insurance company. The practice is particularly useful in life assurance, which makes up 58% of global insurance policies, and has given Cayman Islands insurers the ability to operate with a much broader range of securities and a higher risk tolerance than is available in other jurisdictions such as the US. Segregated cells also allow insurance managers to maintain specific assets for specific clients thus protecting individual companies from the general performance of the market or the manager.

The CEO of Cayman insurer Crusader International Management, Ian Kilpatrick, said that 'It is this flexibility of investment that has driven the considerable interest in variable life and variable annuity policies in the Cayman Islands over the last few years.'

Bermuda has always offered the ability for companies with the desire for separate cells to tailor structures via its 'private Act' mechanism, but the new legislation will make it quicker and easier to achieve this, particularly for simple segregated cell structures.

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