Euroguard converted to a PCC in January 2007 and is the first Gibraltar-based contractual cell company to do so.

Registered as an exempt company, it allows organisations to obtain similar benefits to those offered by captive insurance companies at reduced cost and complexity. Euroguard offers specialist and innovative risk financing programmes which can substantially lower the cost of insurance and subsequently reduce risk.

What is PCC?

A cell captive company is a niche insurance company owned and controlled by the sponsoring or core capital provider, which operates insulated experience accounts or cells. Each cell is created specifically for the benefit of a client. The performance of each of these is determined by the premium and investment income earned within it, less any reinsurance, claims and management costs.

On conversion to a PCC Euroguard is bound by the Protected Cell Companies Ordinance, 2001 (as amended) and this legislation specifically provides for the legal segregation of assets and liabilities between various cells in a cell captive insurance company. The adoption of the PCC legislation further provides legislative effect to the contractual cell captive agreement that Euroguard has successfully implemented since inception.

Structure of Euroguard

At the heart of Euroguard is its ability to offer clients an equity participation in its shareholding structure. Modelled like a honeycomb, it has 50 separate classes of shares and each class defines a unique protected cell.

Alexander Forbes Group Jersey Limited provides the sponsoring capital by way of voting ordinary shares. Preference shares are issued to clients wishing to participate in the structured insurance programmes offered by Euroguard.

On implementation of a structured insurance programme, the protected cell owner will be required to purchase a unique class of preference shares in Euroguard. Each share block comprises a distinct class of non-voting preference share carrying a dividend entitlement related to the insurance business of that particular protected cell.

The shares issued to cell owners provide the capacity to write business, ensuring the necessary solvency requirements are maintained. In the first year, the solvency is supported by the share capital and share premium provided by the cell owner but in subsequent years, the retained profits of each protected cell can also be used to support the solvency requirements. Retained profits can be returned back to the cell owner by way of dividends or used to retain greater risk within the protected cell for the direct benefit of the cell owner and associated policyholders of the specific insurance programme.