Category: Captives & ART · Reviewed by Mark Fox, Broker · Renewals · Last reviewed 2026-06-05
Rent-a-captive (“RAC”) is the historical predecessor of the modern PCC cell captive arrangement. It is a contractual arrangement under which a corporate user accesses the economic benefits of captive insurance through a hosted captive facility, sharing the platform with other users, but without the legal cell segregation that was subsequently introduced by Protected Cell Company legislation from 1997 onwards.
Category: Captives and alternative risk transfer Also known as: Rent a captive, RAC Established: Predominantly 1980s and 1990s; superseded by PCC structures from 1997 Related concepts: Protected cell company, Cell captive, Captive insurance company
Rent-a-captive arrangements typically involved a sponsoring captive insurer (often Bermuda-domiciled) that offered “rent-a-captive” services to corporate users. The user paid premiums to the captive; the captive credited the user’s “account” with premium less expenses and claims; underwriting profit accrued to the user contractually but the user did not have a legal cell in the captive. The arrangement provided many of the economic benefits of captive insurance without the cost or complexity of establishing a stand-alone captive.
Rent-a-captive arrangements were created and operated under contract, without specific cell-segregation legislation. The principal legal weakness — that in the event of insolvency of the captive or of cross-contamination of one user’s losses with another’s, contractual segregation might not survive — was the impetus for the development of statutory PCC frameworks in the 1990s. The 1997 Guernsey Protected Cell Companies Ordinance and subsequent equivalent legislation in Bermuda, Cayman and other jurisdictions provided the legal certainty that rent-a-captive lacked.
Pure rent-a-captive arrangements have largely been superseded by PCC structures in modern captive markets. Where rent-a-captive terminology persists in industry usage, it is often as a colloquial term for cell captive participation rather than as a description of a non-PCC structure. Some legacy rent-a-captive arrangements continue to operate in run-off.
The transition from rent-a-captive to PCC occurred over the period 1997-2010, with most rent-a-captive facilities migrating to PCC structure during that time. The term remains in informal use but typically refers to PCC cell arrangements in modern practice.
A historical (pre-1997) example: a UK mid-cap corporate participating in a Bermuda rent-a-captive facility for its employer’s liability programme; £2m of premium credited to the user’s account in the facility’s books; claims of £1.5m charged against the account; remaining £500k held contractually for the user. The arrangement provided captive-like economics without the user having to establish or capitalise its own captive — but with the risk that, in the event of facility-level insolvency, the user’s £500k might be claimed by creditors of other users or of the facility itself.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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