Cayman’s strong regulation and tax neutrality makes it attractive for global capital: CIRCA’s Mitchell

The Cayman Islands is poised to become an increasingly significant player in the global reinsurance market, according to Greg Mitchell, Chair of CIRCA  (the Cayman International Reinsurance Companies Association).

Speaking ahead of the ReConnect Conference in Cayman, Mitchell highlighted the jurisdiction’s appeal to international capital seeking access to the US risk market.

“The market is starved for capital to meet growing demand for products or simply sustain an existing market. We’ve heard from some US regulators and other US constituents that more capacity and new capital needs to be in the system to reach underserved consumers,” he stated.

Highlighting: “Tax neutrality in Cayman makes it a magnet for global capital and the focus here has, to date, been predominantly on covering US risks. Cayman can play an important role in creating a broader and deeper market to serve those consumers.”

Mitchell also emphasised the strong regulatory environment in Cayman, citing the Cayman Islands Monetary Authority’s (CIMA) long history of international collaboration.

“CIMA was one of the founding members of the International Association of Insurance Supervisors (IAIS) and now has over 70 bilateral and multilateral cooperation arrangements with international regulatory authorities.

“It has a proportional, risk-based regulatory framework that complies with IAIS standards. I think this history of cooperation and collaboration makes CIMA stand out as a strong regulator and does give the jurisdiction credibility,” the executive noted.

Mitchell also pointed out CIMA’s active engagement with US-based regulators, such as its Memorandum of Understanding (MOU) with NAIC as well as MOU’s with numerous US states.

He explained: “When a CIRCA member company assumes business from a U.S. based cedant, CIMA reaches out to the regulator of the cedant’s domiciliary state before CIMA approves the reinsurer entering the transaction and before, when and where applicable, the state regulator approves the cedent entering the transaction. CIMA has begun the process to achieve Qualified Jurisdiction Status in the eyes of the NAIC, emblematic of their continued collaboration with the NAIC regulatory framework.

“CIRCA views this effort as an excellent opportunity to solidify the jurisdiction’s reputation in our largest market. As a highlight of our ReConnect conference we have a regulatory panel that will feature CIMA’s Head of Insurance Supervision on stage with four state Commissioners.”

Looking ahead, CIRCA’s strategic goals for Cayman’s reinsurance market focus on sustaining its attractiveness and fostering organic growth, Mitchell stated.

He believes that in the next three to five years there will be an increase in international capital sources coming to Cayman to access the US risk market, which in turn will provide much needed capacity to that reinsurance market.

“I think there will be further diversification of risks assumed and in the structuring of assuming vehicles. Most importantly, I believe the Cayman Islands will emerge as a well-respected, pivotal component of the global reinsurance market,” Mitchell added.

He continued: “It’s not kingdom building. Our member companies want to protect and sustain the features that made this an attractive jurisdiction for our companies. We have confidence that when new market entrants evaluate Cayman as a potential home, they’ll find what we did.”

“We anticipate organic growth in both the number of companies and balance sheet size. We also genuinely want to foster development of local talent. CIRCA wants young people growing up in the Cayman Islands to see that the reinsurance industry offers them great opportunities for their futures.”

Mitchell hopes attendees of the ReConnect conference can build strong relationships during the event, as well as to learn more about the regulatory environment and the Cayman’s developed service provider market and infrastructure.

“I want them to be able to envision themselves operating in Cayman or doing business with one or more of our CIRCA member companies,” the executive concluded.

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