The Monetary Authority of Singapore (MAS) will consult on introducing a new corporate structure, the protected cell company (PCC), to scale alternative risk-transfer solutions, says Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry.
Gan, who is also MAS's chairman, made the announcement in his speech at the Association of Banks in Singapore’s (ABS) annual dinner on June 25.
“A PCC allows assets and liabilities to be ring-fenced within individual cells under a single core entity. This makes it possible to structure different risks separately, while using shared infrastructure,” he explains.
The result, he adds, would lead to greater flexibiltiy, lower cost and more efficient risk transfer.
PCCs will also be able to enable corporates to access captive insurance solutions more easily. In addition, the structure will allow sponsors of insurance-linked securities to transfer risks to capital markets in a cheaper and more efficient manner.
“By enabling more alternative risk transfer solutions, the PCC framework will complement the traditional reinsurance market, expand risk capacity, and deepen Singapore’s role as a hub for insurance and risk solution innovation,” says Gan.
