Why Cayman for captive and reinsurance businesses?

By Emma Parker

The Cayman Islands is one of the largest and most well-regarded international financial centres in the world. With over 70% of the world’s hedge funds (Cayman Funds Magazine) and many captive insurance companies domiciled here, the Cayman Islands has become a leading jurisdiction for insurance business, which in turn has contributed to the sector’s continuous growth in the British Overseas Territory over the past decade.

More than 600 captive insurance and reinsurance companies are registered in Cayman (CIMA.ky) alongside several large reinsurance companies, surpassing competing jurisdictions such as Bermuda and Vermont and making Cayman the second-largest domicile globally for captive insurance business and the number-one domicile for healthcare captives.

The international insurance companies domiciled in the Cayman Islands manage more than US$64 billion in total assets and US$17.5 billion in total premiums (Captive International.)

The Cayman Islands has become a popular jurisdiction for establishing captives and reinsurance companies, partly because of its choice not to pursue equivalency with Solvency II, a European directive. Instead, the Cayman Islands has focused on its international clients, particularly those in North America, and now more than 90% of captive insurance business in Cayman comes from the United States. This focus has advanced the Cayman Islands’ industry and established it as a frontrunner over other jurisdictions.

Tax neutrality has been another major factor in Cayman’s success as an insurance domicile. Tax neutrality means a level playing field for Cayman-domiciled insurers and reinsurers. The majority of Cayman captive insurance companies have parent companies based in the US and must report to the US tax authorities. Domiciling in Cayman not only removes any double taxation risk, but also means less time and money is spent on global tax compliance. Cayman’s transparency and tax neutrality continue to make it a great place to establish an international insurance business.

The Cayman Islands has firm regulations on anti-money laundering, tax evasion and stable cooperation with international regulatory authorities. The Cayman Islands holds itself to the highest standards, priding itself on its transparency, efficient world-class regulation and durable infrastructure.

The close proximity between the Cayman Islands and the United States is a further factor that makes the jurisdiction a popular destination for international business relocation, alongside the beauty of the island, a healthy work-life balance and its history as a long-established global finance centre.

Insurance companies looking to do business in the Cayman Islands are attracted by the amenities and infrastructure that Grand Cayman has to offer, in particular in communities such as our flagship development of Camana Bay. Camana Bay is a thriving business and financial centre and the prestigious address of many Cayman Islands and international businesses. The 685-acre community is located in the heart of Seven Mile Beach, and boasts over 700,000 square feet of Class-A office space. It is the Caribbean’s only true mixed-use, master-planned community with easy accessibility to high-end residential property, schools, healthcare, retail and leisure opportunities.

Camana Bay is the address for Greenlight RE, Aureum RE, United Insurance Company, Aon and Knighthead Annuity, as well as numerous other international insurance service providers, all portraying Camana Bay as a location where insurance business can thrive.

The Cayman Islands government is constantly adapting its approach to the international insurance market, through cooperation between private and public sector organisations and an active Insurance Managers Association of Cayman (IMAC) organisation.

Adrian Lynch, deputy chair of IMAC and managing director of Aon in the Cayman Islands, commented: “With over 40 years behind us and a well-established infrastructure on the industry and regulatory side, allied to our ever increasing links with US and Asian markets, I am convinced Cayman faces a bright future in the insurance and reinsurance space.