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The risk retention series:
How Much Risk Should Professional Service Firms Retain?
The Use of Protected Cell Companies

Release Date: October 2021
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Aon’s Professional Services Practice share insights to help firms navigate a hardening insurance market in the fifth article in a series exploring risk retention.

Previous articles in The Risk Retention Series discussed the use of single parent and group captive insurance companies. The third principal category of captive insurance companies is a Protected Cell Company (PCC) which has several unique characteristics.

A PCC (also known as a Segregated Account Company) is a type of captive insurance structure comprised of two main components:

  • (1) a capital base contributed by an independent owner/sponsor – which can be an insurer, broker or other entity
  • (2) individual cells which can be utilized by third party insureds seeking a turnkey risk retention or transfer vehicle

PCCs are promulgated under the law in certain jurisdictions, notably, Guernsey, Gibraltar, Bermuda and Malta as well as Vermont and Washington, D.C. in the United States. Enacting legislation for PCCs stipulates that the risks held in each individual cell cannot impact any other cell. As a result, an organization can use an individual cell, with, among other requirements, the relevant insurance license and capital backing provided by the PCC owner to manage its individual risks. There are conveniences and benefits that come with PCCs, but there are also important considerations unique to PCCs that are designed to protect their sponsors, reviewed in Important Considerations, below.

Professional Service firms may use a Protected Cell Company for several functions, including:

Risk Retention Vehicle

As explained in “How much risk should professional service firms retain? The use of single parent captives”, a captive insurance company is traditionally used as a risk retention vehicle that formalizes and quantifies retained risk, providing benefits to professional service firms that are choosing to retain risk. A PCC provides a cell to act as a single parent or group captive for organizations that are not ready to commit to the time, cost and/or administration required to open and maintain their own captive subsidiary. PCCs can generally become operational faster than traditional single parent or group captives and require a relatively low commitment in cost and management time, when compared to single parent or group captives.


“Fronting” refers to situations where a specific type of insurance license may be required for an application. Two fronting examples where PCCs are especially useful for professional service firms are:

  • (1) When a geographic-specific license is required to comply with admitted insurance laws, such as in EU jurisdictions. PCCs have been established in jurisdictions such as Malta to assist self-insurers with compliance with EU admitted rules. A Malta PCC, for example, taking into account certain considerations, can be set up to write risks on a pan-European basis, thus allowing the insured to self-insure this risk in compliance with relevant local continent-wide insurance laws. The flexibility of PCCs means the cell itself can be the risk retention vehicle, or, if the insured already has a captive structure, the captive can be set up as reinsurance of the cell.
  • (2) In some circumstances, there may be reinsurance capacity where no direct insurance is available. A PCC can be a tool to access this reinsurance capacity, assisting professional service firms in optimizing myriad sources of risk transfer capital.

Risk Warehouse

Protected cell companies’ legal structure, where each cell is independent, means they are ideal vehicles to ring fence risks and/or funds to satisfy these risks. PCCs have been used to warehouse earmarked funds to satisfy a legal judgement. They are also used to warehouse the run-off risks of captives that are no longer needed or viable. The advantage of using a PCC for risk warehousing is their low cost, minimal senior management time and administration (compared to single parent or group captive insurers). They also generally have, as compared to single parent or group captive insurers, low barriers to entry and exit which means they can be used for temporary but highly secure safe keeping.

Important Considerations

PCCs come in many shapes and sizes. Commercially available PCCs are often offered by a sponsor/owner to third parties for their risk use. To protect the sponsor from having insolvent cells, these PCCs will often require a letter of credit or other type of collateral to make up the difference between the premium and the maximum cell risk level (the risk gap). Certain contractual wording will be required of the cell user to protect the PCC sponsor.

PCCs can be a solution for certain unique risk issues faced by professional service organizations. Aon is an industry leader in PCCs through its subsidiary, White Rock. White Rock operates in several US, European and other jurisdictions. More information on White Rock is available at

David Christensen


Aon’s Professional Services Practice values your feedback. If you have any comments or questions, please contact David L. Christensen or Connor Galvin.

David L. Christensen
Managing Director
New York

Connor Galvin

Connor Galvin
Vice President and Director