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Singapore weighs Protected Cell Company framework for collateralized reinsurance
The Monetary Authority of Singapore is consulting on a PCC regulatory framework designed to support collateralized reinsurance, including sidecars, and more flexible ILS issuance.
Singapore is working on a regulatory framework to enable Protected Cell Company, or PCC, structures that could support collateralized reinsurance and help broaden insurance-linked securities, or ILS, issuance in the city-state, according to Artemis. Artemis reports that the Monetary Authority of Singapore launched a consultation on the PCC framework, which would be usable for collateralized reinsurance arrangements, including sidecars, and for more efficient ILS issuance. The article also notes that Singapore has discussed similar approaches for several years. Law firm Rajah and Tann Singapore partner Simon Goh, who leads the firm’s Insurance and Reinsurance Practice, said the PCC structure could be a “game changer” for Singapore’s captive insurance and ILS landscape. He argued the structure could widen the pool of corporates able to operate their own captive insurer through a cell of a rent-a-captive, since the costs and resources to run a standalone captive have largely limited participation to large corporates such as multinational companies. For ILS, Goh said the PCC option could allow smaller transactions by making it more economical to structure ILS within a cell than under current regulations that may require sponsors to use a Special Purpose Reinsurance Vehicle. Artemis also said the PCC structure could, to a lesser extent, expand design choices for structures such as a sovereign risk pool.