Segregated portfolio company (SPC)

The segregated portfolio company (SPC) is a single company, mostly under Cayman Islands law, whose assets and liabilities are ring-fenced by portfolio. It is the Cayman Islands version of the Guernsey protected cell company; Bermuda has its own, the segregated accounts company. One legal entity, one board, one license, and inside it portfolios that each hold their own assets and liabilities, often with their own shareholders. The statute imposes the separation: a loss on one portfolio is paid from that portfolio's assets, and an unpaid creditor cannot go after the neighbor's money. Whatever sits outside the portfolios, the general capital, answers only for general debts. The tool appeals wherever people want more contracts without more companies. A group captive opens one portfolio per subsidiary. An ILS (insurance-linked securities) manager turns its transformer into a platform where each collateralized reinsurance treaty has its own compartment and its own collateral. A public pool takes on new members without mixing their risks with those of the original ones. Setting up a portfolio costs a fraction of setting up a company. The weak spot is the law outside the home jurisdiction. Segregation was created by Cayman statute and holds before Cayman courts; before a foreign judge who does not know the structure, ring-fencing has not been tested in every scenario. Contracts therefore carry a limited recourse clause restricted to the portfolio, which backs the statutory protection with a contractual one. An underwriter dealing with a portfolio looks at that portfolio's assets and nothing else: the size of the parent company guarantees nothing.