Bermuda Segregated Accounts Company (SAC): How It Works

Understanding the Segregated Accounts Company (SAC) in BermudaCopy link to section

A Segregated Accounts Company (SAC) in Bermuda is a single legal entity that can hold its assets and liabilities in walled-off pools called segregated accounts, so that a claim against one account cannot reach the assets of another. The structure is the Bermuda equivalent of what other jurisdictions call a protected cell company, and it has been part of local corporate practice since the early 1990s. This guide explains how the vehicle works, what governs it, how it is taxed, and the trade-offs a foreign owner should weigh before committing.

The SAC is most relevant to non-resident insurers, fund managers, securitisation sponsors, and digital asset businesses that need statutory ring-fencing without forming and licensing a separate company for each line. By 2023 the jurisdiction counted more than 2,000 active cells, an 8.6% rise over the prior year, according to the Bermuda Monetary Authority. Segregated accounts companies and independent SACs make up roughly 15% of captive registrations and around 40% of captive premiums written.

A point worth fixing at the outset: the SAC is one legal person. The accounts inside it divide assets and liabilities by statute, but they are not separate entities and cannot stand alone in court.

Legal Basis and Governing Law: The Segregated Accounts Companies Act 2000Copy link to section

The governing statute is the Segregated Accounts Companies Act 2000, enacted after a rising volume of Private Act applications made it clear that companies needed a faster route to segregation powers. Private Act registration has since become uncommon.

The 2021 amendment to that Act, effective 8 November 2021 with certain provisions taking effect 31 December 2021, expanded eligibility to limited liability companies formed under the Limited Liability Company Act 2016. Before that change, only companies limited by shares could register.

An SAC does not sit under one statute alone. Depending on what it does, it must also comply with the Companies Act 1981 and, for insurers, the Insurance Act 1978.

The Registrar of Companies maintains a public register of SACs, and registration follows an application and payment of the prescribed fee. All governing instruments and contracts of an SAC are deemed governed by Bermuda law, with the parties deemed to submit to the jurisdiction of the local courts.

A separate vehicle, the Incorporated Segregated Accounts Companies Act 2019, gives each cell its own legal personality. That regime is distinct from the SAC Act and addresses a different need, which we return to below.

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The Core Mechanism: Legal Segregation of Assets and Liabilities Between AccountsCopy link to section

The mechanism is statutory, not contractual. Assets linked to a segregated account are available only to meet the liabilities owed to that account's owners and creditors, and they are protected from the general shareholders and from any creditor whose claim is not linked to that account.

Each account is a distinct pool of assets and liabilities, separated by law from the general account and from every other account. No asset linked to one account may be used to satisfy the liabilities of another.

Linking is what makes an asset, right, contribution, or obligation belong to a particular account. That link is established either by an instrument in writing, such as a governing instrument or contract, or by an entry in the records of the company.

The Act implies a term into every contract: the parties agree that liability will be met only from the assets of the account to which the transaction is linked. Anything recovered in breach of that term is held on trust by the recipient, and the company may make adjustments between accounts where a creditor wrongly enforces against the wrong assets or where recovery fails.

Contracts are entered into, and suits brought or defended, in the name of the SAC itself in respect of a given account. If one account becomes insolvent, a receiver can be appointed over that account alone, leaving the rest of the structure intact.

Defining Features and Structure of an SACCopy link to section

The features below shape how a foreign owner would build and run the vehicle.

• Legal personality: The company is a separate legal entity; the segregated accounts are not.
• Eligible base entities: Companies limited by shares and LLCs formed under the Limited Liability Company Act 2016 may register. Before the 2021 amendment, only share companies qualified.
• General account: Assets and liabilities not linked to any segregated account sit in the general account.
• Securities per account: The SAC may issue one or more classes of securities linked to a specific account, carrying the right to distributions from that account.
• Ownership and voting: A common pattern is for the voting share to sit with the party running day-to-day management, while account owners hold securities linked to their account rather than voting shares.
• Governing instrument: This document sets out how a person becomes an account owner, any voting rights they hold, management methods, profit payment mechanics, and asset distribution on winding up an account.
• Company name: The name must end with "Segregated Accounts Company" or "SAC," and that designation must appear on letterhead, business cards, websites, and promotional material.

Every SAC must appoint a Segregated Account Representative (SAR) licensed by the Minister of Finance, whose details go into the company's Directors and Officers Register, open to public inspection. For SACs writing insurance, those caught by AML/ATF rules, or other categories the Minister sets, the SAR must be a "regulated person" subject to a supervisory authority.

For US-based clients, the comparison that lands is the Delaware Series LLC. A Bermuda LLC registered as an SAC works in a functionally analogous way.

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Common Use Cases and Who Chooses an SACCopy link to section

Insurance is the dominant home for the structure, followed by special purpose vehicles, financial guarantees, securitisation, and derivatives programmes. Multi-class investment funds, digital asset businesses, and multi-asset holding companies also feature regularly.

The clearest fit is the rent-a-captive. A sponsor licenses a captive insurance company, then rents its capital, licence, and operating capacity to participants, each of whom funds a segregated account through a subscription for preference shares or a participation agreement. The board of the SAC takes all actions in respect of each account.

Insurers also use the structure to separate reserves across different products, particularly long-term lines. Fund managers build master-feeder structures, multiple share classes, and arrangements tailored to different investor groups, strategies, or terms.

Holding and asset management businesses give each asset, client, or asset class its own account. The digital asset sector has adopted SACs for stablecoin and real-world asset structures seeking bankruptcy remoteness. Across these uses, the draw is faster setup, lower cost, and lighter capital requirements than standing up a separate company for each line.

Taxation and Key Compliance TreatmentCopy link to section

Bermuda imposes no corporate, income, capital gains, inheritance, estate, stamp duty, or withholding tax as a baseline. That neutrality is the starting point for most foreign-owned SACs.

The position changed for large groups with the Corporate Income Tax Act 2023, which introduced a 15% corporate income tax on in-scope multinational enterprise groups, aligning the jurisdiction with the global minimum tax (Pillar Two) standard. An SAC that forms part of a qualifying MNE group could fall within scope, and that analysis needs specialist advice.

Economic substance is the other overlay. Entities carrying on a "relevant activity" such as insurance, fund management, financing and leasing, banking, or holding entity activity must meet substance thresholds or claim non-resident status, under a regime first enacted in 2017 and set out in the Economic Substance Act 2018.

There is no carve-out for the SAC form itself; substance is assessed at the level of the SAC entity, so an SAC writing insurance or managing funds will typically need to demonstrate substance. The BMA issued a guidance note in July 2024 setting expectations for insurers running segregated accounts, covering clear contractual arrangements, governance and risk frameworks, adequate reporting, loss reserve specialist opinions, and appropriate returns of capital.

One structural limit applies regardless of tax status: as an exempted company, an SAC cannot carry on business inside Bermuda.

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Main Advantages of the SAC StructureCopy link to section

The headline benefit is ring-fencing without proliferation. A business can separate assets and liabilities by account instead of incorporating, and possibly licensing, a fresh subsidiary for each line, and without falling back on trust or contractual workarounds.

For insurers the saving is direct. Risk can be walled off across products inside one licensed entity rather than across a cumbersome group of companies, with lower setup and maintenance cost.

The protection is statutory, and the courts have upheld it. Assets in one cell cannot be commingled with another, and creditors are barred from enforcing against assets not linked to their account; in an insolvency, a receiver can be appointed over a single account without disturbing the rest.

For a foreign owner, the practical points matter:

• 100% foreign ownership of the exempted base company is permitted, with no local ownership requirement.
• Owners' names do not appear in the public records.
• Shelf SAC companies are available.
• A Bermuda LLC registered as an SAC mirrors the Delaware Series LLC, a familiar reference point for US clients.

Registration of the SAC layer is quick once the base company is in place, though you should confirm the current Registrar timeline rather than rely on a fixed figure.

Limitations and Important ConsiderationsCopy link to section

The structure carries real constraints, and several of them bite hardest on cross-border use.

A segregated account has no separate legal personality. It cannot sue or be sued in its own name, so every legal action runs through the SAC itself. Where a structure genuinely needs each cell to be its own legal person, the Incorporated Segregated Accounts Companies Act 2019 offers that alternative.

Recognition abroad is the larger risk. Not every jurisdiction has equivalent segregation legislation, so the statutory walls may not be upheld or recognised outside Bermuda.

Where transaction documents are governed by a law other than Bermuda law, a bi-location governing law clause should be added so the segregation provisions remain governed by the SAC Act. This is a drafting point that protects the core feature of the vehicle.

Other matters to plan for:

• If a company applying to become an SAC has traded before, creditors must generally be notified, and the directors' statutory declaration must confirm either that no creditor will be prejudiced or that creditors have consented or had adequate notice, unless the Minister directs otherwise.
• A company carrying on business other than insurance must obtain approval from the Minister of Finance before applying to the Registrar.
• The BMA may require an insurance programme in a segregated account to be fully collateralised to policy limits, which can remove the lower-capital benefit some non-commercial insurers seek.
• The SAR carries a statutory duty to report within 30 days on insolvency risk, non-compliance with the SAC Act, or involvement in criminal proceedings anywhere in the world.

Beyond Companies Act 1981 obligations, the company must keep separate records of assets and liabilities for each account and the general account, prepare financial statements per account, and maintain a register of account owners. That accounting overlay is ongoing, not a one-off.

Formation Overview at a GlanceCopy link to section

Setting up an SAC is a two-step exercise: incorporate the base company under the Companies Act 1981, then register that company under the SAC Act. Both steps can run together so the incorporation date and SAC registration date coincide, and an existing Bermuda company can also convert.

The BMA must approve incorporation of the exempted base company. Every ultimate beneficial owner must be identified, and anyone holding 10% or more of the shares signs a personal declaration of good standing with verification documents. An account owner who holds no voting shares does not usually need separate BMA vetting.

At the second step the company files a "Form 1" statutory notice with the Registrar of Companies, describing the business purpose and confirming it will follow the SAC Act's accounting procedures. An insurer may apply directly to the Registrar; any non-insurance business needs prior ministerial approval first. The application papers filed with the Registrar and the BMA do not form part of the public record.

These are statutory fees from the Government of Bermuda Official Gazette; the per-account SAC figures derive from the January 2021 notice, and you should confirm the figure in force against the most recent Government Fees Amendment Regulations before you budget. Annual returns and fees for the base company fall due in January each year to the Registrar, with a penalty for late filing.

The company must appoint a Segregated Account Representative in Bermuda, typically a regulated person or someone approved by the Minister of Finance. Registration of the SAC layer is generally completed within a short window once the base company is approved, but treat any single quoted turnaround as indicative until confirmed with the Registrar. The full step-by-step process is covered in our separate incorporation guide.

ConclusionCopy link to section

The SAC gives a foreign owner statutory ring-fencing inside one legal entity, with no local ownership requirement, owner names kept off the public record, and a tax baseline of zero for groups outside the Pillar Two net. Its limits are equally concrete: cells are not separate legal persons, recognition abroad is not guaranteed, and the per-account compliance and SAR duties run continuously. For insurers, captive sponsors, fund managers, and structures needing bankruptcy remoteness, it is a well-tested option; where each cell must be its own legal entity, the incorporated alternative deserves a look. Match the vehicle to the use, and confirm current fees and substance obligations before you commit.

How Expanship Can Help Your Business in BermudaCopy link to section

Expanship helps foreign owners assess whether an SAC fits the intended structure, coordinate the base company incorporation and SAC registration, and arrange the mandatory Segregated Account Representative, while handling the wider obligations a non-resident entity faces locally.

• Company incorporation and SAC registration with the Registrar of Companies and the BMA
• Registered agent and registered office in Bermuda
• Tax registration and filing, including economic substance and corporate income tax assessment
• Ongoing compliance management, annual returns, and statutory record-keeping per account
• Accounting and bookkeeping, including financial statements prepared by segregated account
• Banking introductions for the entity and its accounts

To discuss your structure and next steps, contact Expanship Bermuda.

Frequently Asked QuestionsCopy link to section