As businesses grapple with increasingly complex and interconnected risks, from climate-related disruptions to geopolitical instability and supply chain fragility, the search for flexible and cost-effective risk management solutions has never been more pressing. The use of captive insurance vehicles as a mechanism for alternative risk transfer is well established, offering corporates a powerful tool to retain risk more efficiently, reduce premium costs, access reinsurance markets directly, and achieve greater control over their risk financing arrangements. In particular, protected cell companies (PCCs)/segregated account companies (SACs) are useful because they allow multiple participants to share a single regulated vehicle whilst maintaining strict legal segregation between each cell’s assets and liabilities, reducing the cost and complexity of establishing and maintaining separate captive entities.
What is a protected cell company?
A Protected Cell Company is a single legal entity that comprises a central “core” and one or more separate and distinct “cells.” The assets and liabilities of each cell are legally segregated from those of other cells and from the core itself. This means that if one cell suffers losses, creditors of that cell generally cannot claim against the assets held in another cell or in the core.
The core provides centralised governance, oversight and regulatory capital, while each cell operates independently with its own financial statements, policies and risk profile. Cells can be established or dissolved relatively quickly, providing considerable operational flexibility.
PCCs have been widely used in the captive insurance market for decades, particularly in established domiciles such as Guernsey (which pioneered the structure in 1997), Bermuda, the Cayman Islands and several US states.
The statutory segregation of assets is the defining feature that distinguishes a PCC from a conventional corporate structure. Without it, organisations seeking to ringfence different risk programmes would typically need to establish separate legal entities each with its own capital requirements, governance arrangements and administrative overhead.
Singapore’s proposed PCC captive regime
What the consultation proposes
The MAS consultation paper proposes a new PCC Act that would introduce the PCC as a structure available to MAS-licensed entities. Initially, the framework is designed to support three use cases (referred to as the Insurance Use Cases in the paper):
- Captive insurance, including both dedicated captives (where a firm manages multiple programmes through separate cells within a common core) and rent-a-captive solutions (where smaller firms lease a cell within a shared facility).
- Insurance-linked securities (ILS), enabling insurers to access capital markets by issuing ILS through separate cells within a PCC structure, without the need to establish a new special purpose vehicle for each transaction.
- Sovereign risk pools, supporting multi-country risk financing initiatives such as disaster risk financing.
The consultation covers a broad range of structural and regulatory matters, including the governance framework for PCCs, segregation of assets and liabilities, funding arrangements, re-domiciliation and corporate conversion, anti-money laundering requirements, corporate insolvency and winding up, and the applicable tax framework.
Benefits for corporates
The proposed PCC regime could provide several advantages for corporates considering alternative risk transfer solutions in the Asia Pacific region.
- Cost efficiency and accessibility: Under current arrangements, establishing a standalone captive insurer or special purpose vehicle involves considerable time and expense. A PCC structure allows multiple insurance programmes to operate within a single legal entity, sharing administrative infrastructure and reducing both setup and ongoing costs. This is particularly significant for mid-sized companies that may lack the resources or economic justification to form their own captive insurer but could readily participate through a rent-a-captive cell.
- Statutory asset segregation: The legal ringfencing of each cell’s assets and liabilities provides protection against cross-contamination of risk. Corporates can be confident that adverse outcomes in one programme will not affect other cells or the core, delivering a level of protection that would otherwise require multiple separate entities.
- Access to Asian markets: Singapore’s position as a regional financial centre and developed reinsurance market makes it an attractive domicile for corporates with pan-Asian operations. The PCC framework is expected to draw interest from both regional and international players seeking a base for alternative risk transfer in Asia Pacific.
- Speed of execution: For ILS transactions and other capital markets-linked insurance structures, the ability to use cells within an existing PCC rather than establishing a new vehicle for each deal can enable faster execution, lower issuance costs and improved viability for smaller or customised transactions.
Looking ahead
Singapore’s proposed PCC regime is a welcome addition to the risk management infrastructure for corporates in Australia and the region. The consultation is open until 7 August 2026. MAS has indicated that it will adopt a phased approach: the current paper addresses policy proposals for the new PCC Act, while the draft legislation and subsidiary regulations will be consulted on separately at a later stage. The framework is expected to take effect in 2028.