London & Colonial Assurance Plc (‘LCA’) was established as a public limited company in Gibraltar in 2001 and as a life insurance provider. Since LCA was established, Gibraltar, along with many other jurisdictions, has enacted Protected Cell Company (‘PCC’) legislation.
Put very simply, a PCC is a form of company comprised of individual parts, known as ‘cells’. For LCA, this means that individual cells may be created within its structure for each of its policyholders. These cells are under Gibraltar law a legally recognised way of ring-fencing and protecting each policyholder’s assets. Each cell has its own designation (the policy number) and it is the Directors’ duty to keep and account for the assets and liabilities of each cell separately. The PCC legislation prohibits the assets of a cell from being used to satisfy any liability not related to that cell.
In late 2018, LCA’s Board of Directors decided to convert LCA into a Gibraltar PCC, supplementing the existing contractual arrangements with specific statutory protection under the Protected Cell Companies Act of Gibraltar.
As a PCC, LCA’s obligations to existing policyholders continue unchanged but each individual policy will be allocated to its own individual cell. LCA will meet its obligations to policyholders solely from the funds held by LCA in the relevant individual cell linked to their policy.
For policyholders, this means that their entitlements under their policy will be limited to the amount of available assets allocated to their specific cell. A policy linked to a particular cell therefore does not have any recourse to the assets allocated to other cells or to any non-cellular assets of the company.
The conversion to a PCC under the Protected Cell Companies Act of Gibraltar was straightforward. As part of the PCC
Following receipt of the approval of the Gibraltar Regulator; the Gibraltar Financial Services Commission, the conversion took effect on 14 December 2018. The new Certificate of Incorporation showing LCA’s new company name can be viewed here.
The Board of Directors believe that the PCC structure provides increased peace of mind for its policyholders by adding statutory ring-fencing protection to the assets held in respect of each policy issued by LCA.