Cell Incorporated Companies and Captive Insurance
One of the hallmarks of the international financial services industry is its constant drive to create new products in response to the risk management and financial planning needs of successful businesses. The captive insurance industry, responding to the need of smaller businesses for faster set-up and more affordable administration of captive insurance companies, created the protected cell company structure. A protected cell company exists where there is a core company with cells or sub-accounts attached to the core. The purpose of a protected cell company is to centralize certain administrative functions, while segregating the assets and liabilities of the different cells or sub-accounts of the protected cell company. This enables each cell to engage in the business of insurance, separate and apart from the other cells. While the protected cell company structure has many advantages, it may present significant liability issues, as the cells or sub-accounts are not separate from the core. As a result, it is not clear whether the cells or sub-accounts are completely protected from the liabilities of the core.
In response to this issue, Saint Lucia has enacted legislation that provides for the separate existence of the individual cells. This has created a captive insurance company structure known as the incorporated cell company. The incorporated cell company structure is similar to the protected cell company structure in that it involves individual cells that are attached to a core company. The difference is that, under the incorporated cell company structure, each cell is a separate legal entity that files its own articles of incorporation and obtains a separate taxpayer identification number. The separate legal identity will protect the cells from the liabilities of the core and the other cells.
The incorporated cell company structure has two primary components. The first is the Incorporated Cell Company (“ICC”), which acts as the core. The second is the individual cells attached to the ICC and known as Incorporated Cells (“IC”). Under the incorporated cell company structure, the ICC obtains an insurance license from the jurisdiction’s insurance regulators. The ICC’s license permits ICs attached to the ICC to engage in the business of insurance. The ICs do not obtain an insurance license, but simply register under the ICC. It is the ability of the IC to essentially borrow the insurance license of the ICC that results in lower set-up and ongoing administration costs for the IC. In order to register under an ICC, an IC is required to execute an operating agreement with the ICC. In addition, the ICC must control a majority of the board of directors of the IC registered under it. St. Lucia is a jurisdiction with a favorable incorporated cell company statute, which is extremely robust and ideal for this type of structure.
Asset Protection and Financial Planning
FOILS offers strategic and innovative solutions to our clients cross border Tax, Estate/Wealth Preservation, Dynastic Relocation Planning, Fiduciary Design, and Asset Structuring. FOILS through its principals, also provides sound and practical advice to our clients, in relation to their Asset Financing and Investment Engineering services requirements as well as providing Strategic Corporate Finance Solutions to companies, service providers and existing structures. We advise companies on their required Tax and Regulatory Compliance obligations both in the UK, Isle of Man, and throughout the Offshore space, including BVI, Bahamas, Cayman Islands, Saint Lucia, and Saint Kitts and Nevis. FOILS also assists investment managers in implementing compliance protocols which allow for a smoothe and efficient application of their regulated acitivties.