The document discusses captive insurance and protected cell companies (PCCs) as alternatives to traditional commercial insurance. It notes that companies are motivated to use captive insurance vehicles for various reasons, including difficulties obtaining certain types of commercial insurance or high costs. Captive insurance allows companies to self-insure risks and potentially share in profits. A PCC provides protected cells that allow different organizations to safely share an insurance company. The document then provides details on a specific PCC in Guernsey and the advantages of captive insurance structures.

1. IN205 - Captive Insurance and Protected Cell Companies: The Opportunities
The significant growth in the captive insurance industry reflects a change in the way that many commercial and professional
organisations cover and finance their risk.
Companies are motivated by many different factors when considering the use of a captive insurance vehicle. They may find
certain types of commercial insurance difficult to obtain or costly. In addition by paying premiums for traditional, directly covered
insurance, companies with good records of managing risk may be subsidising others with far poorer risk records. Captive
insurance also offers opportunities to share in the potential insurance profits that are available and reduce costs when
compared to traditional direct insurance.
What is a Captive Insurance Company?
A captive insurance company is a wholly owned insurance subsidiary of a non-insurance parent, which is used to self-insure
the risks of the parent and associated companies.
What is a Protected Cell Company?
A Protected Cell Company (PCC) is a single legal entity but with the ability to create individual “protected cells”. The assets of
one cell are statutorily protected from the creditors of another. A variety of organisations can therefore safely use different cells
within one PCC.
Managed Risk Insurance PCC Limited
Managed Risk Insurance PCC Limited (MRI) is a protected cell company that has been established in Guernsey to act as a
captive insurance company for a number of different organisations. Each cell acts as an insurance company and is managed by
insurance specialists, who are regulated by the Guernsey Financial Services Commission.
MRI is managed by directors from Dixcart in Guernsey, and experts from the insurance industry.
Captive Insurance in Guernsey
Guernsey has an outstanding reputation for innovation and professionalism in the world of international insurance and has
become the leading European jurisdiction for captive insurance. Guernsey is regulated to international standards by the
Guernsey Financial Services Commission.
Regulations, rules and codes of conduct covering captive insurance companies are included in:
The Insurance Business (Bailiwick of Guernsey) Law 2002.
The Protected Cell Companies Ordinance 1997 as amended by the Protected Cell Companies (Amendment) Ordinance
1998.
What are the Advantages of Captive Insurance?
The use of a captive insurance company provides a number of opportunities and advantages:
1. By participating directly in the indirect risk, a captive insurance company can enjoy a reduction in the premium cost. An
organisation can also make certain that its premiums mirror its own position, rather than reflecting the insurance cost of other
organisations with inferior claims records. Any potential premium surplus can be retained as profit in the captive.
2. Investment income received from premiums, until paid out in the form of claims or reinsurance costs, can be retained in the
captive by the shareholders. This income can potentially be used to increase the level of risk insured in the captive.
3. The ability of a captive insurance company to deal directly with the reinsurance market may generate additional cost savings.

2. 4. The insurance market can be very cyclical in terms of premium cost and cover availability. The use of a captive insurance
company can smooth insurance costs over the medium term.
5. Captive insurance can enable an organisation to provide insurance for risks not easily covered in the conventional insurance
market.
What Risks can be Covered?
In principal any risk can be covered through a captive structure.
Popular types of risk covered within a captive structure include professional indemnity and commercial insurance. Other types of
insurance, which include the cover of combined risks on a number of individually owned or managed positions, such as
property insurance, are also often covered through a captive or PCC.
Why Consider the Use of a Protected Cell Company?
A stand-alone captive insurance company has to meet very specific capital and solvency requirements. The use of such
structures is therefore generally limited to organisations with insurance premiums over £500,000.
The advantage of a PCC is that the capital requirements are provided by others. A PCC can therefore provide an easy and cost
effective way to benefit from the captive insurance market. Viability is also possible at a lower premium income level than for a
stand-alone captive, starting at approximately £200,000.
The directors and insurance managers of a PCC are provided by the owner of the company. These experts can greatly reduce
the amount of time that the management of the parent company might need to spend on insurance matters, in comparison to a
captive insurance company.
Can Risk be Limited?
A cell in a PCC can reinsure for risks in excess of a defined amount and thereby limit the potential exposure of the cell.
Alternatively some cells can be used for top up insurance over and above that available in the insurance market. This type of
catastrophe insurance will generate a potentially higher pay out, but with a lower risk factor.
Additional Information
Captive insurance and Protected Cell Companies offer potential advantages to a number of commercial and professional
organisations.
If you require any additional information please speak to Alan Corlett: alan.corlett@dixcart.co.gg or John Nelson:
john.nelson@dixcart.co.gg. Or please call the Dixcart office in Guernsey on: 01481 723996.

3. DIXCART GROUP OFFICE LOCATIONS
Website: www.dixcart.com
Dixcart Guernsey Dixcart Trust Corporation Limited
Contact: Alan Corlett or John Nelson
Address: PO Box 161, Dixcart House, Sir William Place,
St Peter Port, Guernsey, CI, GY1 4EZ
Tel: +44 (0)1481 723996 Fax: +44 (0)1481 727417
Email: advice@dixcart.co.gg
Full Fiduciary Licence granted by the Guernsey Financial Services Commission
Dixcart Isle of Man Dixcart Management (IOM) Limited
Contact: Simon Kelly
Address: 69 Athol Street, Douglas,
Isle of Man, IM1 1JE
Tel: +44 (0) 1624 649250 Fax: +44 (0) 1624 615603
Email: advice@dixcart.co.im
Licensed by the Isle of Man Financial Supervision Commission
Dixcart Madeira Dixcart Management (Madeira) Lda
Contact: John Dias or Carlos Lourenco
Address: Avenida do Infante 50, 9004-521,
Funchal, Madeira, Portugal
Tel: +351 291 225019 Fax: +351 291 226418
Email: advice@dixcart.pt
Dixcart Malta Dixcart Management Malta Limited
Contact: Sean Dowden
Address: Level 15, The Business Tower, Portomaso,
St Julians, STJ 4011, Malta
Tel: +356 2248 4000 Fax: +356 2248 4050
Email: advice@dixcart.com.mt
Dixcart Nevis Dixcart Management Nevis Limited
Contact: John Terry
Address: PO Box 598, Dixcart House, Fort Charles, Charlestown, Nevis,
St. Kitts and Nevis, West Indies
Tel: +1 869 469 2829 Fax: +1 869 469 6509
Email: advice@dixcartnevis.com
Dixcart Sark Dixcart Management Limited
Contact: Alex Magell
Address: Le Grand Dixcart
Sark, Channel Islands, GY9 0SD
Tel: +44 (0)1481 832444 Fax: +44 (0)1481 832394
Email: advice@dixcartsark.gg
Full Fiduciary Licence granted by the Guernsey Financial Services Commission
Dixcart Switzerland Dixcart Corporate Services Sàrl
Contact: Christine Breitler
Address: 3, rue du Port, PO Box 3083,
1211 Geneva 3, Switzerland
Tel: +41 22 320 37 65 Fax: +41 22 800 32 05
Email: advice@dixcart.ch
Dixcart UK Dixcart International Limited
Contact: Laurence Binge or Joe Dunne
Address: Hillbrow House, Hillbrow Road, Esher,
Surrey, KT10 9NW, UK
Tel: +44 (0) 1372 461400 Fax: +44 (0) 1372 461401
Email: advice@dixcart.co.uk