Bermuda and Cayman PPLI: segregated accounts, insurer classes and US-facing carriers

Bermuda and the Cayman Islands are two Atlantic offshore centres where PPLI carriers are domiciled outside Europe and the United States. In both, the central legal idea is segregation by statute: one insurance company can hold separate pools of assets and liabilities, each ring-fenced from the others and from the company's general account. Both also matter to US-connected families, because some carriers there elect under US tax law to be treated as US corporations.

Why Atlantic offshore carriers exist

Offshore life carriers serve clients not tied to an EEA regime and, in some cases, clients with US tax exposure. Their features differ from the European model on the Luxembourg page:

Neither model is inherently better; what matters is which mechanism protects the assets in the specific policy, and whether the policy fits the tax rules of its owner, insured and beneficiaries.

Bermuda: insurer classes under the Insurance Act 1978

Bermuda's Insurance Act 1978 defines long-term business as contracts "of insurance on human life or contracts to pay annuities on human life". Long-term insurers are registered in classes; the classes most relevant to commercial PPLI writers are defined by total assets, measured excluding assets held in long-term segregated accounts:

Source: Insurance Act 1978 (consolidated to December 2022). Amounts are in Bermuda dollars, pegged at par to the US dollar. The minimum solvency margin for each class is set by BMA rules and is not quoted here, because the BMA page this site previously relied on could not be retrieved on 24 October 2026; refer to the BMA's current requirements. Bermuda also has long-term classes used mainly for captive-style business; refer to the BMA for their conditions. Regulatory minimums do not measure a carrier's actual capital strength: read the carrier's own regulatory filings and, where available, its financial condition report and ratings.

A market that keeps changing

The BMA's September 2026 registration statistics (19 October 2026) list 42 newly registered insurers across all classes from January to September 2026 — new registrations, not the total number of insurers. They are cited only to show that carrier landscapes change. When a carrier is new or restructured, ask for the regulatory status of the specific entity that will issue the policy; carriers and custody covers mergers and portfolio transfers.

Bermuda: how a segregated account ring-fences assets

The Segregated Accounts Companies Act 2000 (SAC Act) defines a segregated account as "a separate and distinct account … pertaining to an identified or identifiable pool of assets and liabilities … which are segregated or distinguished from other assets and liabilities" of the company (s.2). The core protective rule is in s.17 (nature of segregated accounts, application of assets and liabilities): a liability attributable to a particular segregated account extends only to the assets linked to that account, and the creditor has no recourse to assets linked to any other segregated account or to the general account (s.17(5)). Section 11(4) adds a deemed term in every contract linked to an account that the counterparty "will not have recourse to, the assets which are linked to any other segregated account or to the general account".

In PPLI, a carrier can place a policy's portfolio in a dedicated segregated account, so that, in defined circumstances, creditors of the carrier's general business or of other policies cannot reach that account's assets. What it does not do:

• it does not protect against investment losses in the account itself;
• it does not decide how a court outside Bermuda treats the segregation if assets or custodians sit elsewhere;
• it does not protect the policy from the policyholder's creditors (see asset protection).

The Act has been amended over time (latest consolidation 8 November 2021, against which the section numbers above were checked). Ask which account holds your assets and request the carrier's confirmation that the account is established under the SAC Act or the corresponding provisions of the Insurance Act.

Cayman: licence classes and portfolio structures

The Cayman Islands Monetary Authority (CIMA) supervises insurers under the Insurance Act, 2010, as amended. CIMA's FAQ describes Class A licences, split into Local and External, and a Class B licence that "is now sub-divided into a Class B(i), a Class B(ii) and a Class B(iii)", with the sub-class depending on how much related business a captive writes. CIMA thus describes Class B in the context of captives; which class a given life carrier holds should be checked on CIMA's register. CIMA's licensing conditions for long-term (life) business are not covered here; refer to CIMA and Cayman counsel.

Cayman's segregation tools are company-law structures:

For a comparison of the Cayman SPC as a fund vehicle against the Singapore VCC and Luxembourg funds, see the sister site linked below; this page covers insurance only.

The US §953(d) election and the excise tax

US persons who pay premiums to a foreign insurer face a federal excise tax: IRS Form 720 lists "Life insurance, sickness and accident policies, and annuity contracts" at US$0.01 per dollar of premium (1%), and a treaty exemption claim must be disclosed under §6114. Some offshore carriers address this by electing under IRC §953(d) to be "treated as a domestic corporation". The election requires that the foreign insurer:

1. is a controlled foreign corporation, applying a "25 percent or more" ownership test in place of the usual "more than 50 percent";
2. would qualify as an insurance company under subchapter L if it were a US company;
3. meets Treasury requirements to ensure US tax is paid; and
4. "makes an election to have this paragraph apply and waives all benefits to such corporation granted by the United States under any treaty".

Because the carrier is treated as a US corporation for federal tax purposes, the excise tax on premiums is generally not in point (confirm with US tax counsel). A §953(d) election is one route, not a requirement: a US person can also hold a policy from a US carrier, or from a non-electing foreign carrier, which brings the 1% excise tax; a policy from any offshore carrier can also bring FBAR reporting. In every case the policy must meet §7702 and §817(h), and the holder must avoid investor control. Whether a particular carrier has made and maintains the election is a fact to confirm in writing.

Structure does not cure conduct. In Webber v. Commissioner (US Tax Court, 2015), the holder of two policies issued by a non-US carrier was taxed on the account income because he in fact directed the investments through his advisers; the case is summarised on US domestic PPLI. An offshore carrier, a segregated account and a manager mandate do not prevent recharacterisation if the holder directs the investments, so a written communications policy and records of the manager's own decisions matter. Whether they suffice is a question for US tax counsel; see also tax compliance.

Checks before using a Bermuda or Cayman carrier

1. Which entity issues the policy, which regulator supervises it, and in which class or licence category?
2. Which segregated account or portfolio holds the assets, and under which statute?
3. Where is the custodian, and which law governs the custody agreement?
4. For US-connected owners, insured persons or beneficiaries: has the carrier made a §953(d) election, and does the policy form meet §7702 and §817(h)?
5. Who appoints and replaces the investment manager, and what written rules govern contact with the holder?
6. How will the policy be reported under CRS and FATCA? Reporting follows the policy in the ordinary course.

Tax outcomes depend on the residence of the policyholder, insured and beneficiaries. Obtain advice in each relevant jurisdiction, including Singapore, Hong Kong and mainland China where applicable. If you need help applying this to your situation, you can register an enquiry through the contact options on this site.