Protected cell proliferation drives White Rock expansion

A proliferation in protected cell company (PCC) structures being experienced around the world was a key factor in White Rock setting up an additional operation in the US, according to Aon regional managing director Nancy Gray.

Earlier this month, Aon’s protected cell business White Rock Group set up shop in Washington DC, the seventh location it has branched out to since its inception more than 20 years ago.

Now with active operations in Gibraltar, Guernsey Malta, Isle of Man, Vermont and Bermuda alongside, the business is bidding on significant growth in the PCC space in the next five years.

Dermot Finnerty, a managing director at White Rock, said, “In the time since we established, we have opened up or managed more than 400 cells. We currently have more than 250 in operation. Just three years ago, we had 130. We certainly hope to grow to 500 cells in the next three to five years time, it’s certainly achievable.”

White Rock managing director Dermot Finnerty

A number of onshore and offshore domiciles have introduced cell structure legislation in recent times, most recently the State of Georgia, which introduced its captive bill earlier this month, suggesting growth in the PCC space will continue.

Speed to market is a reason why cell structures have continued to increase in popularity, both Gray and Finnerty explained, and this is pushing businesses to consider them more widely.

“When you look at a PCC structure, both the cost and the capital requirements are less than setting up a single parent captive,” Gray said. “PCCs are now responding to the unique needs of an organisation when they are going through a placement. For example, if a business is having difficulty placing specific lines of business, or has gaps in coverage, a PCC is able to respond to those needs.”

Finnerty added that while a fully-fledged captive is still often the choice for some companies, the efficiency of opening and operating a cell is important.

“A cell is quicker to establish from a client point of view. They’re quick to set up and exit, so we’re very positive about growth,” he said.

Alongside easier access to the market, businesses are now viewing cell structures as a viable alternative to standalone captives due to changes in the overall insurance market. Finnerty explained: “We’ve seen strong growth in this area and we expect it to continue. As reinsurance and capital markets continue to converge, we are seeing increasing demand for protected cell solutions for market access, fronting solutions, insurance-linked securities (ILS) facilitator cells and warehousing solutions.”

White Rock is experiencing the most of its growth through businesses in the fortune 1000, Gray revealed, because PCCs are often seen as a stepping stone to setting up a single parent vehicle.

“I think fortune 200 or 250 companies tend to have their own captives at this point in time. For some of the cell captives we managed, they became an incubator for businesses. They sometimes start with a cell structure, put in the risks they need insuring or a quick fix on their programme structure. They then eventually establish a single parent. It’s a way of dipping their toes into captives,” she said.

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