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The use of EU onshore Protected Cells as a capital efficient, cost-effective, flexible and secure alternative to owning a standalone insurer or captive, together with the benefits PCCs offer under Solvency II. Presentation by Ian-Edward Stafrace to the Financial Services In Malta conference in Stockholm Oct 2011 on Insurance Protected Cell Companies (PCC)
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Ian-Edward StafraceMIRM FCII PIOR Chartered Insurer
Risk Analyst & International Business [email protected]
Atlas Insurance PCC Ltd
Financial Services In MaltaStockholm Grand Hotel, 5 Oct 2011
EU InsuranceProtected CellsCaptives on a budget
www.atlaspcc.eu
PCC
Cell
Cell
Cell Cell
Core
Insurance PCC Purpose
Segregate cellular assets & liabilities
Allow different owners with varying interests to participate in 1 company
Cells set up with less capital as min requirements apply to PCC as a whole
Owning a Cell in aProtected Cell Company (PCC)
www.atlaspcc.eu
Only EU State ToHave PCC Legislation
Approachable Regulator
EU Single PassportEnglish, Time Zone, Flight Connections
EU Compliant Regulations
Tax Efficient
Why Malta
www.atlaspcc.eu
No Minimum Guarantee Fund (MGF) Required
No Fronting Required for EU/EEA Risks
Reinsurance access for smaller investors
Lower Running Costs vs. Stand-Alone companies
EU Standalone Insurer EU Protected Cell
€2.3
Million €180,00
0
Protected Cells: “Low-cost” AlternativeTo Owning A Stand Alone Insurance Company Or Captive
• Complying with EU directives through PCC core capital• E.g. Typical minimum
capital needed for general insurer with €1m annual premium:
www.atlaspcc.eu
Maltese PCC = Cost sharing of SII requirements & Capital for cells
Benefits of PCC under Solvency IICell
Cell
Cell Cell
Core
Pillar IQuantitative Requirements
• Core puts up Minimum Capital Required (MCR)
• No MCR absolute floor applies to cells (unlike standalones which require min €2.3m/3.5m as per Solvency 1)
• Cells only need to put up own Solvency Capital Requirement (SCR), typically lower than MCR for small undertakings
• PCCs with active cores lend diversification benefits to cells where secondary recourse is allowed, further lowering SCR
Pillar IIGovernance, Risks
Management & Internal Control Requirements
All already catered for by PCC under its
regulated license
Pillar IIIDisclosure
Requirements
All procedural structures & resources in place to report & publish results as one single legal entity
Atlas Insurance PCC Ltd
•Leading Maltese Insurer since 1920s
•First EU PCC after converting in 2006
•Active non-cellular core in which local business is written
History
•Less capital required whilst protecting the policy holder as Atlas can allow cells to have secondary recourse to its active core
•Less costs thanks to shared governance, risk management & reporting
Benefits Under
Solvency II
•Enable subcontracting of cell management to authorised insurance managers
Independent PCC
RegulatorySolvency
Required (SCR)
ActualPosition
SolvencyRatio
At End 2010 (Solvency I) €3.5m €14.5m 414%At End 2009 (Solvency I) €3.2m €13.6m 425%At End 2009 (QISV Solvency II) €7.1m €16.9m 237%
Strong CoreSolvency Position
