Protected Cell Company (PCC) vs Conventional Rent-a-Captive (RAC): A Modern Structural Comparison

October 8, 2025

Captive insurance continues to evolve as organizations seek efficient and secure ways to manage their risks. Both the Protected Cell Company (PCC) and the Conventional Rent-a-Captive (RAC) allow multiple clients to access captive benefits without forming their own licensed insurers. However, while the RAC model relies heavily on contractual arrangements, the PCC structure provides statutory segregation and greater legal certainty. This paper highlights the key differences and explains why PCCs have become the preferred platform for modern multi-client captive operations.

1. Introduction

Rent-a-captives were originally developed to give smaller organizations access to the benefits of self-insurance without owning a full captive. Over time, the lack of statutory segregation in conventional rent-a-captives created concerns about insolvency exposure and ownership of underwriting profits. The Protected Cell Company (PCC) structure was later introduced to address these shortcomings by providing legal segregation between each participant’s assets and liabilities.

2. Structural Overview

Conventional Rent-a-Captive (RAC)

A RAC is a single insurance company that rents out portions of its capital and licence to different participants. Each participant’s results are tracked separately by internal accounting, but there is no statutory separation under law. The segregation is purely contractual, and profits are returned through participation agreements rather than dividends.

Protected Cell Company (PCC)

A PCC is a single legal entity divided into a core and multiple legally segregated cells. Each cell holds its own assets, liabilities, and participants. This segregation is protected by statute, ensuring that creditors of one cell cannot claim against another. Profits may be distributed to cell participants in a manner similar to dividends, providing clearer ownership and governance structures.

 3. Comparative Analysis 

Aspect	RAC	PCC
Legal Segregation	Contractual only	Statutory segregation under PCC laws
Ownership of profits	Participants rent access to the captive’s licence and balance sheet. No legal ownership interest. Economic right only via contract.	Participants rent or establish a cell but do not own the PCC. Can issue cell shares or make cell level distributions.
Insolvency protection	Assets exposed to parent insolvency	Full ring-fencing of assets and liabilities per cell
Regulatory recognition	Depends on jurisdiction and manager’s controls. Simpler concept but weaker in legal segregation and investor confidence.	Widely recognized under modern insurance laws. Recognized and regulated in most leading captive jurisdictions.
Ease of setup	Simple initial setup, but each RAC is a standalone company requiring its own incorporation, licence, and approvals.	Quick setup once PCC is licensed — new cells can be established through board resolution and cell agreement.
Setup & Maintenance Cost	Each RAC must maintain its own company costs (audit, management, compliance, substance costs and licence fees). Renters effectively bear these expenses.	Lower for each cell — core company bears licence, audit, and compliance cost. Cells share this infrastructure.
Substance requirement	Each RAC must individually demonstrate substance in its jurisdiction, increasing cost and administrative burden.	Substance is maintained at the PCC core level (management, control, premises). Each cell benefits from the core’s compliance.
Market credibility	Moderate	High – preferred by regulators and reinsurers

 4. Profit Distribution Mechanism

In a RAC, the participant has no shareholder status, so profit cannot be distributed as dividends. Instead, the rent-a-captive makes a contractual payment under a participation agreement. In a PCC, profits are legally attributable to each cell and can be distributed as cell-level dividends or surplus returns, subject to solvency requirements. This creates clearer accounting treatment and greater comfort for both regulators and auditors.

5. Advantages of the PCC Structure

The PCC model offers multiple advantages for captive managers and participants alike:

• Statutory protection of each participant’s assets

• Enhanced transparency and regulatory recognition

• Scalable framework for adding new programs or clients

• Easier demonstration of solvency and profit ownership

• Broader market acceptance among reinsurers and brokers

6. Conclusion

While both structures enable access to captive benefits without establishing a wholly owned insurer, the PCC provides a legally robust and regulator-recognised framework. By combining flexibility with statutory protection, the PCC has become the preferred platform for multi-client captives, agency programs, and structured insurance solutions worldwide.

Green Oak PCC’s Perspective

Green Oak PCC Ltd. believes the Protected Cell Company structure represents the future of captive insurance. It combines statutory segregation, shared regulatory substance, and efficient capital use within a single, well-regulated framework. Each client operates through its own legally protected cell, benefiting from the PCC’s established licence, compliance, and management infrastructure without the complexity or cost of maintaining a standalone insurer.

As a licensed Protected Cell Company in Labuan IBFC, we are dedicated exclusively to the PCC model. Our focus is on helping clients design and manage risk programs that are flexible, transparent, and sustainable under evolving global regulations.

For more information about establishing a cell with Green Oak PCC Ltd., please contact enquiry@greenoakpcc.com