The reinsurance industry in the Cayman Islands continues to grow after a three-year high in registered insurance companies in the Cayman Islands was recorded in 2020 (source; source), and this growth shows no signs of slowing down anytime soon.
Well-regulated framework
In April 2021, Moody’s Investor Services affirmed the Cayman Islands’ Aa3 rating, reflect the government’s low debt burden, high per-capita income and strong institutional framework. While this demonstrates the British Overseas Territory’s financial stability, it’s only one of many reasons why reinsurance is becoming one of the country’s fastest growing industries.
During the past five decades, the Cayman Islands has established itself as one of the world’s leading financial services jurisdictions thanks in part to a business-friendly environment and a sophisticated regulatory framework, which plays a vital role in long-term commercial success and in protecting the financial health of public and private institutions. As a result, the Cayman Islands has earned a spot as one of the top three captive insurance domiciles in the world (source). In 2019, Captive International reported $21.1 billion in total assets for the largest 20 commercial reinsurers domiciled in the Cayman Islands, approximately one-third of the total assets of international insurers.
Adrian Lynch, executive vice president – North America, Artex Risk Solutions, and Jim Owen, chief financial officer at Aureum Re, both agree that the Cayman Islands’ regulatory framework is particularly attractive for large global reinsurers.
“[Our regulatory framework] is particularly attractive for large global reinsurers looking to transact in the Cayman Islands,” says Lynch.
Owen reiterates that this framework is an overarching factor in Cayman’s ability to align itself with the US from a regulatory and reporting perspective. He also notes that the Cayman Islands insurance law permits reinsurers to adopt their own internal capital model for capital requirements.
“This has been good for us because we’re able to adopt the NAIC [National Association of Insurance Commissioners] risk-based capital guidelines thereby remaining transparent to the US market,” says Owen.
Poised for growth
Cayman’s well-regulated financial system is characterised by transparency, strict anti-money laundering laws and a community of professionals committed to maintaining high-calibre transactions. Additionally, the jurisdiction’s high standard of living, sophisticated infrastructure, politically stable government, straightforward immigration and residency laws and top-quality commercial and residential real estate options are attractive to reinsurers.
In late 2020, the Cayman International Reinsurance Companies Association (CIRCA) was formed in response to the industry’s emergence and with a mission to promote the reinsurance industry “through peer interaction, advocacy and education on topics impacting the regulatory and business environment.”
“We’ve seen a steady increase in leasing enquiries from both startups and established businesses in the reinsurance industry,” says Jennifer Ebanks, Senior Manager of Leasing at Dart. “The trend began before the pandemic and has continued since the formation of CIRCA. We are also seeing some of the major names in the industry showing interest in relocating here.”
Ebanks notes that Dart Real Estate’s existing Class A and Class B office buildings are nearly fully leased and the developer is adding 200,000 square feet to its existing portfolio to meet the demand the team are receiving from across the financial services and technology industries.
“These are high-quality commercial spaces managed by a best-in-class landlord,” says Ebanks. “But I also believe this continued demand for commercial real estate is the result of people discovering all the wonderful things the Cayman Islands has to offer such as ease of doing business and a truly sophisticated lifestyle.” Ebanks notes that the Cayman Islands is poised to grow an industry that has typically domiciled in other jurisdictions.
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