Malta Insurance Business: Protected or Incorporated Cell Company?

Co - Author Christopher Paul Abela - Financial Services Executive

Dr. Priscilla Mifsud Parker | 01 Apr 2017

Malta Insurance Business Protected or Incorporated Cell Company

Malta Insurance Business: Protected or Incorporated Cell Company?

Malta is a Financial Jurisdiction having a very sophisticated and comprehensive legal framework. [1] Alongside Investment Services and Banking Services offered in Malta, one finds the Insurance Business. To boost the Insurance sector, Malta has been vanguard in legislating new structuring concepts for possible structures available for potential patrons in the Insurance Business. Moreover, Malta is the first and currently only EU member state to have in force regulatory framework, providing the possibility of either the Protected Cell Company (PCC) or the Incorporated Cell Company (ICC) formations.

Similarities & Advantages of both formations

PCCs and ICCs are sister formations, as they both provide the same basic function –  having cellular assets and liabilities segregated from the core company and other cells assets and liabilities. This segregation though is accomplished in different methods.

Both formations are funded upon a cellular model. The corporate vehicle is set up in such way that the assets and liabilities can be ring-fenced, or segregated, so as only to be available to the creditors and shareholders of each particular cell. [2] Each cell will therefore have its own assets and liabilities, thus allowing them to function independently of the rest of the company. This allows various stakeholders (owners or otherwise) to participate in one insurance business through the creation of cells. [3]

In either formation, it is essential that the activities carried out are strictly insurance business related activities, which inevitably requires a license. An advantage of utilising either of these formations is that that as the entire structured company is essentially one business, only one licence would be required. Emanating from this is the ability to collectively have access to the authority and therefore this places the cell owners at an uncommon advantage. [4]

Each cell would have unique ownership, structure and functions pertaining to different classes of insurances, therefore the requirements of one cell do not impinge on the requirements of another cell. The fact that they are cellular companies need to be disclosed in all methods of communication. The segregation of each cell is effective in such a manner from the cell company that it is not meant to function as parent of the cells.

Comparison of PCCs and ICCs

A PCC as a whole is one legal entity, as the cells are structured within the core company. An ICC’s entity is separate than that of its cells. In the incorporated structure, the cell company is one company and the cell is a separately registered company.

In either case, the assets and liabilities of the core company and the cells are separate. Though this segregation in the ICC setup is clear as each Cell is a separate legal entity, in the PCC setup, a ring fencing principle is applied segregating the cells from each other and the core company.

The Directors, Secretary and Registered Address in a PCC setup are the same throughout due to the structure (one legal entity). This is not the case in an ICC. Contrary to the norm in ICC legislation of other jurisdictions, the Maltese ICCs regulations and rules do not necessitate that the Company Directors, Secretary and Registered Address are alike for the ICC and each IC. Therefore, each IC may function completely autonomously from the ICC.

Claims towards a Cell are always primarily settled by the Cell and its assets. In an ICC structure, due to the distinct legal personality, a claimant has no recourse towards the core company. Therefore, complete segregation is evident. In the case of a PCC setup, the claimant first has recourse to the PC and its assets. Once these are exhausted though, unless specific agreements are drawn up to the contrary, the claimant has the right to resource to the PCCs assets. Though in no instance may the assets of other cells be brought into any claim.

Another distinct feature that would definitely be considered as to whether a prospective investor takes up the PCC or ICC formation is that of the Capital Requirements. The nature of an Insurance Business is a very onerous one. Therefore, the Capital Requirements of setting up an Insurance Business, together with Solvency and Technical Requirements may be very steep. A principle advantage of both setups is that the regulatory requirements are distributed amongst the core company and any cell thereunder. The difference is that an ICC and any IC thereunder would have to entertain all requirements separately as each is a single legal entity and no recourse to the core assets is available. The situation is different for a PCC. Each PC does not constitute a separate legal entity, therefore certain core requirements in terms of required capital may be distributed amongst the entirety of the company, though each Cell would need to be solvent in its own terms.

Malta Insurance Business: Protected or Incorporated Cell Company?

Many similarities between the two setups exist to almost bring the two head to head. The set-off point being put forward to a potential setup is one wherein the patron needs to see whether they would prefer less liability or less capital injection. As distinguished above, an ICC brings forward better segregation between the ICC and each cell, whilst in the PCC structure, the flexibility of having one legal entity allows for the Capital Requirement to be leveraged for solvency purposes.


For further details into the formation of a PCC or ICC see the PCC Regulations [5] or the ICC Regulations [6] respectively.


[1] Malta Financial Services Authority, A Framework for Financial Services, 2014

[2] Malta Financial Services Authority, A Guide on Establishing Incorporated Cell Companies in Malta, 2014

[3] Pricewaterhouse Coopers, Insurance in Malta, 2012

[4] Ibid no. 3

[5] Companies Act (Cell Companies Carrying on Business of Insurance) Regulations, Subsidiary Legislation 386.10 of 2004

[6] Companies Act (Incorporated Cell Companies Carrying on Business of Insurance) Regulations, Subsidiary Legislation 386.13 of 2010


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