Why Cayman for captive and reinsurance businesses?

May 5, 2020Blog
Commercial Bulding Cayman

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.

Adrian Lynch

“The dislocation in the investment market of the last few weeks has made the need for Cayman reinsurance capacity on the longevity side even more important.”

Cayman’s 40-year track record as a leading international insurance domicile has led to the development of a skilled network of insurance professionals in Cayman with impressive experience and credentials. This has cemented trust between Cayman providers and the global insurance industry who know that Cayman professionals can act as credible advisors. The proficiency of these Cayman providers has assured that the insurance industry in Cayman continues to expand and progress.

The future success of reinsurance in the Cayman Islands will be built on the jurisdiction’s ability to adapt and develop reinsurance and captive business as it moves forward. The Cayman Islands government and private sector is ensuring that the next generation of insurance leaders continue the already innovative work that has taken place in the growing reinsurance industry.

Ultimately, the Cayman Islands offers a compelling location for insurance and reinsurance companies to set up because of its growing economy, its close relationship with the insurance industry in the United States, the expertise of its private-sector professionals, its transparency and willingness to cooperate with international regulatory authorities and its advanced and robust business infrastructure.

Our team assists individuals and organisations in finding residential and commercial property, and shares comprehensive information about relocation to the jurisdiction. A complete introduction to the benefits of the Cayman Islands is made possible by Dart Real Estate. Click here for more.

About the author

Emma Parker has worked with Dart since 2019 and has been writing professionally since 1999. Emma graduated from the University of Manchester with a BA (Hons) in 1997, has a post-graduate Diploma in Communications, Advertising and Marketing and a STEP Certificate in International Trust Management. She has worked in PR, marketing and business development roles, primarily in the legal and financial services sector, since 2001. Emma is now the co-founder of Sidekick, a financial services marketing consultancy in the Cayman Islands. She was raised in the UK, lived in the British Virgin Islands and has made the Cayman Islands her home since 2012. Emma has a passion for exotic travel, her family and Newcastle United Football Club.

 

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