ISACs in Bermuda: An innovative option for business owners

Published: 29 Aug 2024

Bermuda’s well-earned reputation as a pre-eminent offshore financial centre is due in part to its sophisticated legal framework that supports a variety of business structures.

Among the various corporate structures available, the incorporated segregated accounts company (ISAC) offers a unique and flexible solution for businesses seeking to compartmentalise their operations and has become a versatile and attractive option for new and existing business owners.

This article provides an overview of ISACs in Bermuda, highlighting their key features and benefits.

The Incorporated Segregated Accounts Act 2019, which came into effect on January 15, 2020, exists as stand-alone legislation and is an advancement to the Segregated Accounts Companies Act 2000, while also incorporating key features of the limited liability company.

An ISAC is a corporate entity that allows for the segregation of assets and liabilities into distinct incorporated segregated accounts.

Each account operates independently, providing a level of protection for the assets held within it.

This segregation can be particularly beneficial for businesses engaged in multiple activities, such as insurance companies that want to segregate different lines of business or to protect policyholder funds.

Similarly, it can benefit those seeking to protect the interests of different stakeholders, such as investment funds, which would allow for the segregation of different investment strategies or client portfolios.

One of the primary advantages of using an ISAC in Bermuda is the ability to mitigate risk effectively.

By segregating assets into different accounts, businesses can isolate potential liabilities and reduce their overall exposure.

This can be especially valuable for companies operating in high-risk industries or those involved in complex financial transactions.

Additionally, ISACs can be used to protect assets from creditors, litigation, or other potential risks, providing a valuable layer of asset protection.

When securing a loan with a charge, you can choose to register it against either the entire ISAC or a specific ISA. This greater precision offers more flexibility in lending arrangements.

If an ISAC is liquidated, the ISAs remain unaffected. Similarly, winding up an individual ISA doesn’t impact the other ISAs within the ISAC structure.

Furthermore, ISACs provide a high level of investor protection. The segregation of assets ensures that the interests of individual investors are protected, reducing the risk of cross-contamination and enhancing investor confidence.

This can be particularly important for businesses that rely on external funding to support their operations.

ISACs can also be used to streamline operations and improve efficiency. By segregating assets and liabilities, businesses can gain a clearer understanding of their financial position and make more informed decisions.

The knock-on effect of this is cost savings, enhanced risk management, and improved overall performance.

ISACs and ISAs offer greater flexibility than segregated accounts as each account within an ISAC is a separate legal entity.

While segregated accounts are limited to internal transactions within the same ISAC, ISAs can be registered as separate companies, allowing for transfers between ISACs, and granting them the power to engage in external mergers, amalgamations, or even discontinuations in other jurisdictions.

This added flexibility provides ISAs with more options for future transactions compared to segregated accounts.

The tax efficiency of ISACs is another compelling reason for businesses to consider this corporate structure. Bermuda offers a favourable tax environment, with no capital gains tax or inheritance tax.

Although corporate income tax is to be introduced next year, this structure can significantly reduce the overall tax burden on a business and enhance its profitability.

Should you have a business idea that you wish to materialise, or already own multiple businesses, an ISAC may be the right business structure for you due to its ability to manage risks, protect assets, and enhance operational efficiency.

First Published in The Royal Gazette, Legally Speaking column, August 2024

More publications

14 Sep 2026

Navigating BMA’s proposed AI guidance note

Now that the Bermuda Monetary Authority has shifted its focus from general principles about artificial intelligence to a concrete, actionable regulatory framework, board and executive teams of financial service companies must take note and decide whether to become involved in the consultative process.

Jerome Wilson, Karim Creary

Appleby-Website-Employment-and-Immigration

10 Sep 2026

AI in the Workplace: Emerging Legal Issues for Bermuda Employers

Artificial intelligence is rapidly becoming part of the modern workplace. It has moved quickly from being an experimental technology to an everyday business tool. Employers are already using AI to draft job advertisements, screen applications, assess candidates, analyse employee performance, monitor productivity and assist with disciplinary and termination decisions. For employers, the attraction is obvious. AI can process large quantities of information quickly, identify patterns and perform tasks that previously required significant human resources. But such widespread application of AI is also giving rise to legal risk as regulators and courts around the world consider what happens when an employment decision is made, or materially influenced, by an algorithm. It is a question that is likely to become increasingly relevant in Bermuda, as the law necessarily catches up with the technology.

Anna Markiewicz

Appleby-Website-Insurance-and-Reinsurance

8 Sep 2026

Capital rich, softening rates, big opportunity: the growth dilemma

After several years of healthy profits, despite some softening, the reinsurance market remains in good shape – if discipline remains. Meanwhile, new and complex risks are emerging, including data centres, offering big opportunities for growth for those willing to take it on. They were some of the takeaways from 10 senior executives from the Bermuda market who met at a roundtable in Monte Carlo.

Brad Adderley

8 Sep 2026

A refusal to stand still

Anchored by regulatory credibility and an unmatched marketplace, Bermuda continues to widen its offering with capital adaptability and innovation, says Brad Adderley, of Appleby.

Brad Adderley

Appleby-Website-Funds-and-Investment-Services

27 Aug 2026

Late-stage liquidity and the Bermuda fund toolkit

Private-market liquidity once followed an exit. Today, however, it must often be engineered. That matters in Bermuda, where asset management is not only a substantial sector in its own right, but also complemented by Bermuda’s re/insurance and insurance-linked securities market.

Charles Hambling

13 Aug 2026

The limited liability company: ten years on

Nearly a decade after they were first introduced in Bermuda, parties have started to appreciate the benefits offered by limited liability companies — and consequently we have begun to see LLCs used with increasing frequency.

Matthew Ebbs-Brewer

11 Aug 2026

MGAs, capacity and control

Max Tetlow and Cathryn Minors of Appleby examine the forces pushing MGAs toward better alignment and more disciplined capital.

Cathryn Minors, Max Tetlow

28 Jul 2026

Bermuda’s digital asset foresight bearing fruit

The wisdom of Bermuda’s pioneering approach in the digital asset business space has been underlined by the latest global economic impact figures compiled by McKinsey & Company, the global management consulting firm.