Aon’s White Rock protected cell facility adds seventh domicile with D.C.

Insurance and reinsurance broker Aon has further expanded the reach of the protected cell facilities it offers through Aon Insurance Managers under the White Rock Group branding, adding the District of Columbia, U.S. as a seventh domicile location for the vehicle.

Aon Insurance Managers has been steadily growing the usage of its White Rock protected cell facilities over recent years, with growth of insurance-linked securities (ILS), collateralized reinsurance and also the mortgage credit risk securitzation market all drivers of growth.

The White Rock vehicle also offers private ILS transaction facilities in Bermuda as well, under the White Rock Insurance (SAC) Ltd. ILS Program that was established in 2017.

White Rock was the pioneer in protected cells, having launched the concept back in 1997 by setting up the first protected cell company in Guernsey.

Now, under the White Rock brand, Aon operates protected cell companies in Bermuda, Gibraltar, Guernsey, Isle of Man, Malta and Vermont. In total this includes management of some 250 cells and around US $0.73 billion in gross written premium, as well as more than US $2.6 billion in assets.

That’s up from only around 200 cells as of the middle of 2018, so it’s clear White Rock has experienced strong growth in recent months.

White Rock Group Managing Director Dermot Finnerty commented on the news of the expansion to D.C., “I am delighted to announce the launch of our seventh domicile in the District of Columbia as White Rock and Aon build on the significant traction we have gained since first introducing protected cell companies. We now manage a total of 250 open cells, another significant milestone for us, and a testament to the hard work, specialist insight and professionalism of the Aon and White Rock teams.

“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.

“Over the past twenty years since White Rock’s establishment we have delivered innovative solutions to our clients looking at alternative vehicles to manage their risks. Our laser focus on our clients, combined with the excellent potential for growth over the next 12 months, mean that 2019 is set to be another exciting year for White Rock.”

Protected cell structures provide flexibility, enhance market access, offer capital and collateral efficiency whilst at the same time offering security through the ring-fencing of assets and liabilities in a strong regulatory compliant environment.

Adding the District of Columbia as a second onshore domicile increases options for ILS investors, funds and issuers to utilise the United States as a home for any transaction that requires a protected or segregated cell structure.

This could become increasingly attractive to U.S. domiciled investors given changes in tax laws over recent years, as a U.S. domiciled protected cell vehicle could be more efficient for certain ILS arrangements now. In particular, ILS funds under the mutual fund structure could find utilising a U.S. protected cell an attractive option.

Use of a U.S. domiciled protected cell would allow a U.S. ILS investor or ILS fund to interface only with a counterparty in the United States, while the protected cell could then enter into reinsurance agreements with other offshore counterparties.

As such, it’s no surprise to see onshore facilities popping up and this is a trend we’d expect to continue, as the ILS market grows and demand for locally domiciled transaction structures naturally increases.