Pictured: Nate Gemmiti
The reinsurance industry in the Cayman Islands has grown over the past decade, so much so that its businesses decided it was time to unite for certain purposes.
Last month, the founding members of the Cayman International Reinsurance Companies Association — which will be better known by the acronym “CIRCA” — announced the formation of their membership-based group, which was established in October.
The new association’s main purpose is to promote the reinsurance industry “through peer interaction, advocacy and education on topics impacting the regulatory and business environment.”
Reinsurance is basically insurance that is purchased by insurance companies that sell products to the public. For example, an insurance company that sells home insurance to the public will buy coverage from a reinsurance company to protect itself from financial ruin in case of a major claims event, such as a natural disaster like a hurricane.
In exchange for part of the premium or other payments, the reinsurer takes part of a specific risk, says CIRCA Chairman Nate Gemmiti of Knighthead Annuity & Life.
“The existence of reinsurance is invisible to the individual that bought the insurance, but it exists across the entire insurance industry.”
Gemmiti noted that reinsurance is not restricted to property insurance and is also available to life, annuity or any insurance product.
Cayman’s reinsurance industry
As a tax-neutral territory with an established regulatory framework and a world-class captive insurance industry, the Cayman Islands is well-positioned to thrive in the reinsurance industry.
“The reinsurance industry has a strong history in the Cayman Islands,” says Gemmiti. “Market participants often interacted on matters that were important to the industry and have worked collaboratively with our regulators and other stakeholders.”
Gemmiti also says that as a premier global financial hub, the Cayman Islands is well known and trusted by clients and domestic regulators and has been recognised for its “low levels of economic, political and financial risk.”
Cayman is a highly rated domicile that has become a very attractive reinsurance hub thanks to “its focus on transparency and relative ease of doing business,” says Gemmiti. “It offers a perfect environment for reinsurers wanting to grow their business.”
CIRCA, which was incorporated as a Cayman Islands exempted foundation company, is currently offering two membership options through an application process that is reviewed by its board of directors.
“Cayman Islands licensed reinsurers can apply for full membership,” explains Gemmiti, “and parties not eligible for full membership are offered an associate membership option. The reinsurers that are full members of CIRCA differ from traditional captive insurance companies in that their offices are located and staffed in Cayman, as opposed to captive insurance companies that would typically appoint a local third-party manager to represent them in Cayman.”
Among the founding member companies is Aureum Re, whose CFO Jim Owen believes CIRCA’s members will benefit from the newly formed group.
“CIRCA will provide a voice to the commercial reinsurance sector in the Cayman Islands,” he says.
In addition to Knighthead Annuity & Life and Aureum Re, CIRCA’s other founding member companies include Barents Re, CIBC Cayman Reinsurance, Greenlight Re, Nassau Re and United Insurance Company. Conyers Trust Company serves as CIRCA’s supervisor and secretary.
Three of the founding member companies — Greenlight Re, Aureum Re and Knighthead Annuity & Life — are tenants in Camana Bay.
Gemmiti says CIRCA’s board and members are excited about what’s in store for the future of the financial services industry in the Cayman Islands.
“Cayman’s continued focus on balancing regulatory and commercial priorities with its adherence to the highest global standards will undoubtedly continue to fuel continued growth of its financial sector,” he says.
This Article First Appeared In The January 2021 Issue Of Camana Bay Times, With The Headline “Cayman’s Reinsurers Unite.”