Willis sets up cell company in Vermont, open to ILS transactions

by Artemis on October 1, 2015

Willis, the global insurance and reinsurance broker and advisor, has established a new protected cell company (PCC) named Encore in Vermont, which its says is open to hosting and facilitating insurance-linked securities (ILS) transactions.

Protected cell company’s and segregated cell company’s are regularly used by ILS managers and other investors looking for a structure to allow them to transact collateralised reinsurance business. With a number of dedicated PCC facilities in domiciles such as Bermuda, Cayman Islands and Guernsey targeting ILS, Vermont is now host to one as well.

Willis Global Captive Practice, a unit of Willis Group Holdings, has set up the Willis-owned and managed protected cell company (“PCC”) insurance facility, named Encore Insurance PCC, Ltd., in Vermont.

Encore will underwrite U.S. risks and provide its clients with the ability to benefit from their own captive insurance company, or cells for use in reinsurance and ILS transactions, for those who may lack sufficient premium volume or may not wish to operate their own re/insurance company.

Willis explains; “In certain circumstances a protected cell structure provides a more cost effective solution than a traditional stand-alone captive insurance company. The segregation provisions of PCC legislation provides clients with a secure underwriting account without pooling assets and liabilities. Through a PCC, clients can realize the benefits of captive ownership with potentially lower capital commitments, reduced operating costs, and less management time commitment.”

The same is true for ILS managers and investors, for whom establishing their own special purpose re/insurer may not be required. A PCC cell can be used effectively to allow investors to participate in reinsurance transactions on a collateralised basis.

Sean B. Rider, Managing Director – Consulting & Development in the Willis Global Captive Practice, told Artemis; “We have a broad appetite for lines of business in Encore. We are open to commercial property and casualty programs, fully reinsured reinsurance and ILS transactions, pass thru access to specialty reinsurance products, employee benefits risks etc. In general we will assess each inquiry to use this facility on its merits and proceed on a case by case basis.”

The cells of the PCC can also be used by cedants looking to transact with ILS players, who could establish a cell to enable investors to participate in their reinsurance program renewals. Of course, the captive use-case could also be used by any organisations looking to establish a captive but have it fully-funded by capital market investors.

Encore will be managed by Willis Management (Vermont), Ltd. which is headed by David Guerino, Managing Director.

Paul Owens, CEO, Willis Global Captive Practice, commented on the launch; “Encore is a welcome compliment to Willis’s offering of PCC facilities and similar structures that we operate in Bermuda, Barbados and Malta. Our strategy is always to offer clients the widest range of risk financing vehicles and our choice of Vermont allows our U.S. clients all of these advantages while operating in one of the most respected and business friendly domiciles.”

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