The Cayman Islands has the potential to grow its reinsurance sector and set itself apart in terms of its offering and regulatory regime, a panel of experts told delegates at the annual Cayman Alternative Investment Summit (CAIS), being held in Grand Cayman this week.
Chaired by Adrian Lynch, managing director of Aon Cayman, the panel comprised Simon Burton, chief executive, Greenlight Re; Alex Leman, founder, family office Ironside;
Senator Ben Nelson, the former head of the National Association of Insurance Commissioners (NAIC); and Derek Stenson, partner, Conyers Dill & Pearman.
Lynch said that there is a positive theme developing in the Cayman Islands which is worthy of further attention. He said the country’s unique and robust regulatory regime combined with the growing theme of convergence in the funds industry could potentially attract a lot more reinsurers to use the domicile, especially companies focused on North American risks and especially those operating in the longevity sector, managing life and pension risks.
A key distinguishing factor for these companies is that the Cayman Islands, unlike Bermuda, does not have Solvency II equivalence. For some types of risks this makes it a more attractive domicile because less capital is required to be held against those risks compared with under Solvency II.
Stenson highlighted the quality of the regulatory framework in Cayman and, critically, the willingness of the regulator to engage and listen to companies. “They are very approachable commercially minded and responsive and that is a real trump card for Cayman,” he said. “They do not have a one size fits all approach and that is well received by re/insurers looking to work here.”
Burton from Greenlight Re, who had spent most of his career based on Bermuda, said he had been pleasantly surprised by the regime on Cayman. He noted that Greenlight Re has the choice of operating from Cayman or its Dublin-based entity, which is Solvency II equivalent, and it will use whichever platform works better for the risk.
“The reality is that most companies have access to Solvency II on one of their platforms, but you do not need that for all of your risks,” he said. “It is considerably more efficient to do some transactions through a regime that does not have Solvency II equivalency.”
Nelson explained the potential for Cayman to work with the NAIC to establish a form of equivalence with that regime, which would benefit it greatly. He said the key to that would be regular dialogue between all parties on an ongoing basis.
Leman explained how his family office is very interested in the insurance space because of its non-correlated nature compared with other asset classes. He said the office had already done some deals but was looking for more. “What makes Cayman special is the strength of the funds industry here and that is increasingly intersected with insurance and reinsurance,” he said. “Plus, we have the depth of professional talent to be able to execute these deals. I see Cayman as having a bright future in this space.”
CAIS 19, Adrian Lynch, Aon Cayman, Simon Burton, Greenlight Re, Alex Leman, Ben Nelson, NAIC, Derek Stenson, Conyers Dill & Pearman