Advantages of a cell of a PCC
- Operating costs – because of the centralisation of functions within one company, a cell can offer substantial savings on both establishment and ongoing management
- Management time – less executive time to be spent by cell owner, primarily because their attendance is not required at PCC board meetings
- Set up costs – the setting up and closing down of a PCC cell does not require the same legal process for the incorporation or winding up of a company. Therefore it is quicker and cheaper to set up and less expensive to exit.
- No minimum capital – the cell will need to be funded adequately to cover the minimum margin of solvency and risk gap and this may be well below the minimum required for a separate captive.
- Ability to access the reinsurance market to offset the risks
Disadvantages of a PCC
- Control – there is some loss of control as all business decisions are subject to the approval of the PCC board, all cells are subject to the same Guernsey tax treatment, the same auditors and the same financial year end.
- Full funding – the owner of the PCC will expect the cell owners to fully fund their risk gap by means of share capital or LOC.