Over the last few years the Cayman Islands commercial reinsurance industry has experienced double digit growth year on year.
In recent years, the Cayman Islands’ commercial reinsurance industry has experienced impressive double-digit growth annually. By the end of Q1 2024, the number of reinsurance licenses reached 85, with total assets valued at US$83.1 billion. This surge is attributed to a notable trend: many reinsurance companies are now choosing to domicile in the Cayman Islands. This shift to Cayman is often attributed to Bermuda’s adoption of the EU Solvency II (SII) framework for its insurance operations.
The Cayman Islands offer significant advantages for US carriers and other non-European or global reinsurance-focused entities. The jurisdiction provides greater flexibility regarding regulatory capital ratios and investment options, resulting in lower overall operating costs. Unlike Bermuda, which adheres to the SII framework, the Cayman Islands Monetary Authority (CIMA) employs a risk-based regulatory approach, tailoring the licensing process to individual reinsurers.
Cayman’s legislative environment further benefits reinsurers by allowing them to develop internal regulatory capital models. These models can incorporate the US National Association of Insurance Commissioners (NAIC) risk-based capital guidelines, enabling more efficient capital structuring. Additionally, reinsurers can align with US regulatory and reporting requirements, offering familiarity and efficiency in operations.
There is little appetite in the Cayman Islands to pursue the SII framework and this is primarily because 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’s main clients.
In April 2024 the Cayman Islands Reinsurance Association (CIRCA), with other stakeholders, hosted [Re]Connect, the inaugural conference for reinsurance in the Cayman Islands. With attendance at nearly 450 delegates with approximately half being from overseas, [Re]Connect clearly showcased that Cayman was now another option within the reinsurance space with world class facilities and service providers. [Re]Connect demonstrated the Cayman Islands’ government, CIRCA, CIMA and other stakeholders’ steadfast commitment to making Cayman an attractive domicile for reinsurance carriers.
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 from what life in Cayman offers. For example, executives can secure a 25-year Substantial Business Presence Certificate, which means immediate security of tenure. 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.
This combination of government certainty, excellent service providers and insurance professionals, regulatory flexibility, cost efficiency, and strategic alignment with US standards and consolidated jurisdiction-wide commitment to the reinsurance sector are all mixing to fuel the Cayman Islands’ rise as another world class domicile for the global reinsurance industry.
The Cayman Islands offer significant advantages for US carriers and other non-European or global reinsurance-focused entities. The jurisdiction provides greater flexibility regarding regulatory capital ratios and investment options, resulting in lower overall operating costs. Unlike Bermuda, which adheres to the SII framework, the Cayman Islands Monetary Authority (CIMA) employs a risk-based regulatory approach, tailoring the licensing process to individual reinsurers.
Cayman’s legislative environment further benefits reinsurers by allowing them to develop internal regulatory capital models. These models can incorporate the US National Association of Insurance Commissioners (NAIC) risk-based capital guidelines, enabling more efficient capital structuring. Additionally, reinsurers can align with US regulatory and reporting requirements, offering familiarity and efficiency in operations.
There is little appetite in the Cayman Islands to pursue the SII framework and this is primarily because 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’s main clients.
In April 2024 the Cayman Islands Reinsurance Association (CIRCA), with other stakeholders, hosted [Re]Connect, the inaugural conference for reinsurance in the Cayman Islands. With attendance at nearly 450 delegates with approximately half being from overseas, [Re]Connect clearly showcased that Cayman was now another option within the reinsurance space with world class facilities and service providers. [Re]Connect demonstrated the Cayman Islands’ government, CIRCA, CIMA and other stakeholders’ steadfast commitment to making Cayman an attractive domicile for reinsurance carriers.
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 from what life in Cayman offers. For example, executives can secure a 25-year Substantial Business Presence Certificate, which means immediate security of tenure. 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.
This combination of government certainty, excellent service providers and insurance professionals, regulatory flexibility, cost efficiency, and strategic alignment with US standards and consolidated jurisdiction-wide commitment to the reinsurance sector are all mixing to fuel the Cayman Islands’ rise as another world class domicile for the global reinsurance industry.
