Global Captive Management, Ltd. (GCM) is excited to announce the formation of a Segregated Portfolio Company (SPC), Outcomes SPC. Outcomes offers an affordable and efficient captive insurance solution for GCM clients and those looking to enter the market.
“This new SPC adds to GCM’s unique offering as one of Cayman’s leading insurance managers for tailored captive solutions that meet the unique needs of our clients,” said Alanna Trundle, GCM President and one of the Directors of Outcomes. “GCM’s team structure is built around our clients, with all team members based in the Cayman Islands to ensure a unique understanding of the insurance business and excellent response times to client queries.”
Curious about SPCs and how Outcomes can enhance your captive insurance? In this blog, GCM Vice Presidents Jessica Dontas and James Trundle explore the segregated portfolio structure and why they are an effective risk management solution.
Segregated Portfolio Companies: Powerfully versatile for insurance
The Cayman Islands Segregated Portfolio Company legislation was introduced in 1998. The structure allows for the segregation of assets and liabilities within distinct cells of one overarching legal entity.
Think of an SPC as a large office building: GCM owns and manages the building, renting secure, private offices to its clients. Each office holds a client’s insurance program, fully separated from all others.
Sometimes, it’s easier to set up an office by renting space rather than buying space. Renting a cell within an SPC structure provides operational flexibility and a potentially expedited process to launch a Cayman Islands captive insurance vehicle.
Operational management: Best practices for managing an SPC
The regulatory environment in the Cayman Islands, overseen by the Cayman Islands Monetary Authority (CIMA), ensures that each SPC maintains robust compliance and governance procedures, making SPCs an attractive option for those seeking a secure and efficient framework for their operations.
Each SPC has one board of directors who oversee the entire structure. In the case of a cell rental structure, such as GCM’s Outcomes, the board of directors will be independent from the insured business in the cells, or segregated portfolios (SPs), which enhances the board’s ability to govern effectively, free from bias or conflict.
From the cell owner’s perspective, outsourcing the governance of a captive structure takes the regulatory compliance burden out of their hands and allows them to focus on the risk management of the insurance program and their underlying operations.
A licensed SPC relies on its insurance manager for the day-to-day operations of the structure as its principal service provider. An insurance manager is responsible for financial statement preparation, maintaining corporate and compliance records, liaising with other outsourced providers, and much more.
By operating as a cell within an overarching legal structure, each cell gains operational efficiencies of shared licensing fees and economies of scale for some professional services. In addition, outsourcing of corporate governance requirements to the board of Outcomes results in time savings for the owners and cost savings due to the cell not incurring travel and meeting expenses.
Outcomes’ Board of Directors consists of employees of GCM and its parent entity with over 45 years of combined experience in the captive insurance space. Most of the board resides permanently in the Cayman Islands, resulting in prompt decision making when required and the security that substance requirements are being met from within the Cayman Islands.
Risk Segregation: Benefits of the Cayman structure
While each cell in the structure has no separate legal personality from the SPC, each SP must be separately identifiable.
The ring-fencing principle within an SPC protects the assets and liabilities of each cell, allowing them to be protected from the liabilities of the other cells and from the general liabilities of the overarching SPC or Core.
This segregation principle has been tested within Cayman law and has been upheld, providing comfort to cell participants that their assets and liabilities are protected.
As a regulated entity, an SPC with an insurance license will be required to have an annual statutory audit. Each segregated portfolio’s audited statements separately detail its assets, liabilities, income, and expenses, ensuring transparency and segregation of financial information. The audit report, prepared by an independent auditor, verifies the accuracy and compliance of these statements with relevant accounting standards and regulatory requirements, providing assurance to stakeholders about the SPC’s financial integrity and operational soundness.
Outcomes SPC
As an insurance manager, GCM is proud of the boutique and personal service we offer to our clients. Outcomes SPC is an extension of that commitment. We are offering our own rent-a-cell solution, knowing that this entity will provide our clients a lower point of entry to the captive market, coupled with operational efficiencies and supported by strong corporate governance.
“GCM’s independent spirit and ability to work with multiple brokers and carriers makes Outcomes a truly exciting opportunity for our client base,” said Jennifer Reid, GCM Chief Operating Officer and a Director of Outcomes. “We pride ourselves on our responsiveness and ability to adapt. Our clients know that the governance of Outcomes is in good hands, allowing them to focus on their SP’s insurance program and their underlying business.”