Captive Insight Vol I | Page 18

CAPTIVEINSIGHT

“ he speed of recovery to Cayman’s business infrastructure
T
compared with those of other Caribbean countries impacted
such as Grenada, further enhanced the domicile as resilient”

As part of this process CIMA became independent of the
Cayman Government and thus acquired authority to approve
new captive licence applications whereas previously, licence
applications were heard by Cabinet.
Another key test of the domicile was caused by the passing
of Hurricane Ivan in September 2004, a Category 4 storm
which despite its fury did not seriously disrupt the
captive industry as CIMA resumed approving new
licence applications mere days after the storm.
The speed of recovery to Cayman’s business
infrastructure compared with those of
other Caribbean countries impacted
such as Grenada, further enhanced
the domicile as resilient and led to
improved building codes to homes
and office buildings going forward
giving greater confidence to onshore
clients as to the ability of Cayman
to handle future catastrophic
weather events.
As the first decade of the 21st century
proceeded, Cayman saw more positive
changes cementing itself as a captive
market leader, namely the new Insurance
Law of 2010, which took the existing
legislation and enhanced the application of a
risk-based approach towards regulation of different
types of captives depending on the degree of third party
risk with the creation of four new categories of the B licence
to replace the Class B restricted and unrestricted licence,
and also recognising the unique Special Purpose Vehicles,
whose prodigious growth sustained the number of captives
during the world wide recession and soft market since 2008,
via the creation of the class C licence and the creation of
a class D licence, to attract new reinsurers following the
arrival and success of Greenlight Re in 2004. The first
reinsurer to take advantage of the new Insurance Law was
Southport Re in 2013, and it is anticipated many more will
follow. Cayman took a unique position to the Solvency
II proposals in that CIMA has not automatically elected

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to adopt Solvency II equivalency, rather the approach
of “wait and see”, not wanting to add regulatory burden
without assessing beforehand the implications for Cayman
licenced insurers.
Warranting a significant mention is the willingness of
Cayman to accept its obligations in the international
community via its having executed 31 Tax Information
Exchange Agreements (“TIEA’s”) with sovereign nations.
This transparency was acknowledged by the Organisation
for Economic Co-operation and Development’s (OECD’s)
latest Global Forum Peer Review report in April 2013, in
which Cayman was lauded for its “robust and transparent”
legal and regulatory regime, and for Cayman’s
financial industry’s “clear and efficient system”
for releasing information and noted the
quality of its co-operation and speedy
responses to exchange of information
requests,
and
finding
Cayman’s
exchange of information process to be
“well organised, well-resourced and
adequately staffed with knowledgeable
personnel.”
In March 2013 the Insurance
(Amendment) Law was enacted to
allow Segregated Portfolio Company
insurers (“SPC insurers”) to incorporate
their cells for the first time as Portfolio
Insurance Companies (“PICs”). This
enactment gives greater clarity of
governance, with the creation of PIC-specific
boards of directors under the overall auspices
of the board of the “parent” Segregated Portfolio
Company and also increase flexibility regarding PICs
being able to transact in their own right and with other PICs,
and will be brought into force once necessary amendments
have been made to the Insurance Regulations.
The present depicts the domicile in a very strong position
and new application licences showing signs of returning
to pre 2008 levels. In the first nine months of 2013,
CIMA reported 28 approved new applications. Another
key indicator of expected growth is the 1,289 registrants
attending the Cayman Captive Forum in late 2012 exceeding
the previous record set in 2011. Another sign of belief in
Cayman as a domicile is the retention of a growing cadre
of highly skilled professionals, several having left Cayman

Image © Brian Jackson - Fotolia.com

Development’s report on harmful tax practices in 1998,
and was listed in June 2000 as unco-operative as regards
international money laundering, which took the passing
of several pieces of emergency legislation for this label
to be removed.