Cayman Islands: The New Financial Reinsurance Frontier


The Cayman Islands has recently experienced tremendous growth in the financial reinsurance ("FinRe") sector. Within the last 12-18 months a number of FinRe carriers have been licensed and, with word spreading fast, there are a significant number of additional start-ups in the pipeline. Having identified the opportunity in this sector some time ago, the Cayman Islands is now embracing real growth on the ground. There are a variety of reasons for this increased activity in the Cayman Islands, which we will touch on in this article, but a general propensity to facilitate a more NAIC focused model (US model) as opposed to Solvency II (European model) is certainly high among the primary drivers.


FinRe transactions are underwritten with financial management rather than risk transfer as the primary driver. Traditionally, primary insurers have entered into such transactions to either improve solvency ratios, strengthen their rating or boost return on capital. Recent global changes in the regulatory landscape have caused a capital strain on many international pension, life and annuity insurance companies. FinRe is becoming a more popular way to access capital relief for these strains which has stimulated growth in the formation of FinRe companies both globally and locally in the Cayman Islands. As an example, the US retirement market has grown from $11tn from 2000 to over $25tn in 2016. Similar pressures from US pension regulators have caused a growth in pension risk transfer transactions in the United States.


Investment returns from pension, life and annuity reinsurance companies range from moderate to high as a result of the favourable economics involved. Liabilities are high in persistency and have long average durations. A well matched high-grade investment portfolio can produce higher yields because of longer duration. Though the net spread of yield over cost of liabilities can range from 1.0%-1.5%, the asset-to-capital requirements of between 12x-15x results in a high teen or low twenty return for investors, thus making FinRe companies very attractive to the capital markets. With initial capitalisation for FinRe entities starting in excess of $250m, and billion dollar books of business being reinsured, the returns are not immaterial.


To achieve appropriate capital levels and yet sustain credibility, it is critical to the reinsurer to reside in a jurisdiction where there is a high quality but sensible regulatory regime. For example, the EU Solvency II framework requires higher risk weights for longer duration assets and therefore can be punitive, even if the reinsurance company has well-matched liability to asset durations.

The NAIC model in contrast is more favourable. There is little appetite in the Cayman Islands to pursue Solvency II equivalency.

Across all areas of the Cayman Islands financial services sector the jurisdiction is predominantly US facing, indeed 90% of all risks insured by the Cayman Islands international insurance industry are North America based.

Accordingly, Solvency II would simply not be a match for the jurisdiction.

It is no surprise therefore that the Cayman Islands Monetary Authority has shown a willingness to facilitate a more NAIC focused model which, for potential start-ups with prospective US cedants, has been a significant factor in determining that the Cayman Islands is the most appropriate jurisdiction for their new platform.


The Cayman Islands is one of the world's most efficient and well-recognised international financial centres. Given the breadth of its financial services sector and expansive net of stakeholders it is a familiar, trusted and respected domicile. Its infrastructure supports high-calibre international finance transactions, a commitment to stability, integrity and professionalism, and highly talented industry professionals.

For executives of FinRe carriers, a number of softer benefits in the Cayman Islands have also been broadly welcomed.

These include:

  1. the ability to secure a 25 year work permit which means immediate security of tenure in the Cayman Islands;
  2. the ability to acquire or build a home without restriction;
  3. the ability to own a number of vehicles if required;
  4. lower on-going operating costs when compared to competitor jurisdictions; and
  5. no income or payroll taxes.

David Towriss, CEO of Aureum Re which primarily reinsures fixed annuities from US carriers, commented: "We are seeing significant opportunities in the asset-intensive reinsurance space and a continued demand for offshore reinsurance solutions. Our shareholders recognised several advantages in choosing to license Aureum Re in Cayman including the strength of the local infrastructure, a deep and talented employee pool, as well as a strong regulatory authority with a vision to grow Cayman's reinsurance market.

Our target market is US annuity writers and there are material benefits from Cayman not seeking Solvency II equivalency given that our clients are more aligned with the NAIC regulatory regime and risk based capital.

This has helped us offer a compelling reinsurance solution which is flexible in its approach and seeks to increase capital, reduce concentration of risk and reduce volatility of financial results for our clients.

We are delighted to have all of our management team and operations based in Cayman and appreciate the support which our local stakeholders have provided as we seek to grow our business."


The Cayman Islands operates a business friendly and well-regulated financial system reinforced by the philosophy of integrity and transparency, and a belief that appropriate regulation and international cooperation drive commercial success.

The Cayman Islands is a strong proponent of proportionate, risk-based regulation.


The Cayman Islands has a sophisticated legal regime that is based on English Common Law, with the final court of appeal being the Privy Council in London. In addition, a highly efficient and respected court system upholds the jurisdiction's framework of legislation.

Cayman Islands law maintains a legitimate right to privacy, but its confidentiality statute provides a clear gateway for tax transparency and there are no inhibitors for the effective operation of its many international cooperation agreements.


The Cayman Islands also has a global client base of major international companies, financial institutions and governments.

This success is due to the insurance managers, lawyers, auditors, actuaries and investment service providers who choose to work in the Cayman Islands because of the high quality of work and lifestyle.


The aforementioned reasons, coupled with the Cayman Islands government's firm commitment and support to grow the reinsurance sector, have firmly established the Cayman Islands as an attractive domicile for FinRe carriers.

Given the global drivers we anticipate this growth to continue its upward trajectory and that the Cayman Islands will remain at the forefront of the FinRe frontier.


Derek Stenson is based in Walkers' Cayman Islands office where he specialises in insurance and structured products, he has extensive experience advising a wide range of international financial and insurance institutions on all aspects of insurance and reinsurance law and regulation.

Adrian Lynch has overall management responsibilities for Aon's captive insurance operations in the Caribbean including offices in the Cayman Islands, and Puerto Rico. Prior to joining Aon Cayman, Adrian spent seven years as the CEO of a Private Client Advisory group, offering Private Placement Life Insurance structures.

Dara Keogh is a Managing Partner at Grant Thornton in the Cayman Islands. He moved to Grant Thornton earlier in 2017 because of the opportunity to use his vast re/insurance experience and entrepreneurial passion to grow the business, and avail of the opportunity to help his clients, particularly in the re/insurance sector. Dara has prior experience as CFO of a reinsurance company, Corporate Risk Manager for a public life and pensions company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions