Members of our Insurance team recently attended [Re]Connect, the first ever dedicated reinsurance conference held in the Cayman Islands. No surprise, it was a great success! Key market participants were able to see and hear first-hand why Cayman is a fast-growing reinsurance jurisdiction.
Here are our key takeaways:
- An exciting milestone – Cayman's
inaugural [Re]Connect conference attracted c.450 international and
local delegates, all keenly interested in Cayman's growth as a
reinsurance jurisdiction. There was a real buzz and optimism about
Cayman's future as a central player in the global reinsurance
market.
- Government support – In a captivating
keynote address, The Hon. André M. Ebanks, MP, Deputy
Premier; Minister for Financial Services and Commerce, Minister for
Investment, Innovation, and Social Development, stressed the
importance of reinsurance in Cayman's next "season".
Growth of the reinsurance sector complements Cayman's leading
financial services industry and also has the benefit of supporting
the local community through new jobs and additional educational
opportunities.
- No global minimum tax – Cayman will
continue to be cooperative in tax matters by complying with its
reporting obligations; however, it does not intend to implement
Pillar Two, thus maintaining Cayman's tax neutrality.
- Strong Q1 - CIMA issued 12 new insurance
licences in Q1 of 2024 and will shortly be announcing the 9th class
D reinsurer. There is a healthy pipeline ahead and a variety of
applicant types, for example, established reinsurers forming new
Cayman entities to complement operations elsewhere, US-based
insurers setting up a Cayman affiliate reinsurer and completely new
entrants using Cayman as a platform.
- Reinsurance is growing – Cayman is
seeing increased momentum in the reinsurance sector, particularly
in life and annuity, with total premium increasing significantly
from c.US$11m in 2021 to c.US$33m. That said, it's not all
about life and annuity, P&C reinsurers (including InsurTechs)
have a long history in Cayman and P&C accounted for 90% of the
new licences.
- Expansion and maturation of talent pool
– The government has made Cayman an attractive place to do
business and live, with clear paths to long term residency, ability
to buy property and the availability of a 25-year visa, among other
factors. With this, Cayman is seeing a maturing local reinsurance
talent pool with more experienced industry professionals coming to
Cayman to support the industry's growth.
- Robust regulatory environment and international
co-operation – CIMA regularly engages in working
groups and committees at international forums, regularly attends
NAIC national meetings and has also played a central role in
developing The Insurance Core Principles (ICPs) 13 on Reinsurance
and Other Forms of Risk Transfer. CIMA has signed 50+ bilateral and
multilateral cooperation agreements with international regulatory
authorities, including an MOU with the NAIC. In addition, CIMA
regularly benchmarks its own regulatory measures against
international standards and implementation by other
jurisdictions.
- Reciprocal jurisdiction status is on the way
– Cayman is seeking NAIC reciprocal jurisdiction status and
has US state sponsorship. It is anticipated that reciprocal
jurisdiction status will be afforded to class D and domestic
insurers but will not apply to the insurance industry as a whole.
Any policies and legislation required for implementation will be
developed in close partnership with industry.
- Convergence – Cayman continues to see
increasing convergence between the investment funds and reinsurance
sectors. Given Cayman is the leading hedge fund domicile it is no
surprise, that asset managers are increasingly looking to Cayman
for their reinsurance structures. Apart from the obvious
familiarity with Cayman's regulatory and business environment,
asset managers are attracted to the jurisdiction for its ability to
facilitate speed to market without compromising or reducing
regulatory oversight.
- Why Cayman – Cayman has a long history of economic and political stability and it is committed to tax neutrality and certainty. CIMA is a sophisticated, approachable and responsive regulator that is embedded in the international space. The capital framework allows optimisation for complex transactions. The connectivity and closely connected marketplace provides responsiveness and superior service.
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.