A segregated accounts company (SAC) is able to hold certain assets and liabilities in a separate account firewalled from the assets and liabilities of the SAC itself (the SAC’s own account is usually referred to as the “general account”) and the assets belonging to its other segregated accounts.
In order for a company to achieve legal separation of its general account and its segregated account(s) it must be registered as an SAC with the Registrar of Companies (ROC) and comply with all relevant laws and regulations governing the operation of an SAC.
SACs are commonly used in the insurance sector, for special purpose vehicles, and in the areas of financial guarantees, and securitisation & derivatives structures.
The Act is the principal legislation governing SACs in Bermuda, however, an SAC must also comply with other legislation applicable to its structure, for example the Companies Act 1981 and/or the Insurance Act 1978.
Documentation and contracts entered into by an SAC are often governed by the laws of a jurisdiction other than Bermuda. In this situation, a bi-location governing law clause should be added that ensures any aspects of the document dealing with the segregated account nature of the SAC are governed by Bermuda law and the Act.
To register as an SAC, a company must apply to the ROC. If the company is engaged in insurance business (as defined in the Insurance Act 1978) then the company may proceed direct to application to the ROC. If it carries on business other than insurance business, it must first obtain approval from the Minister of Finance (Minister).