WHITE Rock Insurance Co. PCC Ltd has decided to form a protected cell company on the Isle of Man because the domicile is known for its support of innovative insurance solutions.

"The legislation is fit for purpose. It's very much tailored to captive,” said Gaynor Brough, managing director of Aon Insurance Managers, owners of White Rock. “The Isle of Man has a mature and well-established captive market, having been active in the sector since the 1980s.”

Andrew Tunnicliffe, chief operating officer of Aon Global Risk Consulting, in a statement after the White Rock announcement, added, “This is part of our development and growth strategy for the White Rock brand.

"The Isle of Man was selected due to its reputation as a 'can-do' captive domicile" with a high sovereign rating and "its standing as an internationally responsible country as acknowledged by the IMF  and other regulatory bodies."

White Rock already has operations in such jurisdictions as Guernsey, Bermuda, Malta, and Luxembourg. Aon, which has pioneered both protected cell companies and incorporated cell companies, sees such structures as integral to its global captives strategy.

A protected cell vehicle can allow a smaller company to isolate risk without incurring the expense of actually owning a captive. A PCC can be designed to accommodate a quick entrance or exit. In addition to cost savings, Aon said, a PCC can free up management time and offer both capital flexibility and acceptance in more than 41 jurisdictions around the world.

The Isle of Man has 143 non-life insurance companies, "the majority of which are captives," said David Vick, chief executive officer of the Isle of Man's Insurance and Pensions Authority. The annual premium for the sector in 2009 was about ?1.5 billion, with total assets of about ?6.3 billion, Vick added.

The Isle of Man captives sector fits well alongside the 16 life insurance companies that write business on an international basis on the Island, Vick said. The life companies contribute another ?6 billion to ?7 billion in annual premiums and total funds of about ?41 billion.

"In total, that makes the insurance sector here on the island a very, very large part of our market," Vick said.

While the number of entities in the Isle of Man's captives sector is "slightly down," the turnover is up, a reflection of an enhanced level of activity among participants in the market, he said.

The professional infrastructure on the island is well established, and the Isle of Man government recognises the importance of the captives sector, according to Vick.

"One of the attractions of the Isle of Man is the finance sector is really quite broad," he said.

The Isle of Man does not have a specific target as to numbers of captives. "There's a general desire to see that number grow in terms of premium income," Vick said, suggesting the turnover could be pushed up by the determination of captive owners to maximise the use of their vehicles. He felt a hardening of the insurance market would encourage such a trend and also lead to more formations of captives.