Over the last few years the Cayman Islands commercial reinsurance industry has experienced double digit growth year on year.
In fact between Q1 and Q3 2022 eleven reinsurance companies established themselves in Cayman, bringing the total number of reinsurance licences to 75 with total assets of US$28.4 billion. According to Ghislain Ghyoot (IFC Review), many reinsurance companies are moving from Bermuda to the Cayman Islands due to the fact that Bermuda elected the EU Solvency II (SII) route as a framework under which its insurance companies operate. However, as a result of this, US carriers and other non-European and/or global reinsurance-focused entities pay much higher regulatory capital ratios, and have greater investment restrictions as well as higher operating costs relative to Cayman as a result of their SII Regime.
There is however little appetite in the Cayman Islands to pursue the SII framework. The main reason for this is that across all areas of Cayman’s financial services sector, the jurisdiction is predominantly US facing and therefore SII would simply not be a match for the jurisdiction. For many US start ups, the Cayman Islands is the most appropriate jurisdiction for their new reinsurance platform. Another significant factor for executives of reinsurance entities is the value added that life in Cayman brings. For example, executives can secure a 25-year Substantial Business Presence Certificate which means immediate security of tenure and with this they can buy or build a home without restrictions, educate their children in superb schools, know that the healthcare is excellent and that there are no income or payroll taxes.