Cayman Islands Financial Services

In the middle of December, Cayman officials were discussing the country’s future in the Caribbean Community, CARICOM, with a delegation from the group.

On December 14, 2006, after talks with senior Government officials, CARICOM Secretary General, Dr Edwin Carrington, left the Cayman Islands. The Cayman Islands became an Associate member of CARICOM in May 2002.

Dr. Carrington explained the 3 reasons of his 1st trip to the Cayman Islands. The 1st reason was to understand how the Cayman government felt things being as an associate member. Then, he wanted information as regards the areas which Cayman wanted to mark within the context of the Associate membership agreement. The 3ird reason was to receive suggestions on outlining the status of Associate membership to CARICOM from the Cayman government.

Also, a major topic of discussions between the Cayman Islands Government and CARICOM was agriculture.

As to the success in the applications of issues, the government should hear about it in the near future.

The Cayman Islands is one of largest financial centres in the world and a well-known tax haven, which has more registered businesses than people.

In accordance with the Caribbean tax haven’s financial regulator, the number of financial institutions setting up shop in this jurisdiction’s thriving offshore sector rose 7% last fiscal year.

On December 5, 2006, the Cayman Islands Government sought approval for changes to the budget of this financial year in Finance Committee today.

Kenneth Jefferson, Financial Secretary, said that, since the preparation of the Annual Plan and Estimates, changes have resulted in the need to make changes in the current appropriations.

3.7 million dollars was requested in appropriations in 7 output groups. 2.2 million of this sum is to pay for new outputs for the Health Services Authority for services with little to no external revenue earnings.

The Government requested 760 thousand dollars to fund increased operating costs of upgrading the Probation and Aftercare Unit. Also, the Government asked 370 thousand for covering additional security for the Portfolio of Legal Affairs, and 320 thousand for the Economic and statistics office needed to conduct several surveys (like the National Assessment of Living Conditions).

Besides the above-mentioned, the Government requested additional 8 million dollars for the cost of accelerating the construction of the East West arterial road, as well as 5 million for the construction of the road and 3 million for the land purchases and gazetted claims.

Taking into consideration the appropriation changes, the forecast operating surplus after financing expenses and extraordinary items for this financial year accounts for 32.499 million dollars. In accordance with the government, 14.072 million dollars is less than the approved budget.

The Indonesia’s anti-money laundering watchdog has signed the cooperation agreement with the Cayman Islands as well as South Africa.

The cooperation of Indonesia with the Cayman is very strategic as far as Cayman is one of the world’s major financial centres. The cooperation agreements with the Cayman Islands’ Financial Reporting Authority includes the exchange of financial intelligence related to money laundering and terrorist financing.

Indonesia’s Centre for Financial Transaction Reporting and Analysis (PPATK) established October 2003 to help fight money laundering has already entered similar agreements with 17 financial intelligence agencies. The cooperation agreements provide for exchanging financial intelligence and helping to fight the terrorist financing. It is also worth mentioning that after a year of being monitored by the FATF, in February 2006, Indonesia was removed from the list of non-cooperative countries of the inter-governmental FATF.

invoiceIn December, Cable & Wireless (Cayman) is celebrating its 40th anniversary in the Cayman Islands.

The company’s future looks very bright now. Its CEO, Tim Adam, considers the changes he has seen during his 33 years with Cable & Wireless to be amazing.

It is quite notable that today 75% of the top management are Caymanian, including the 3 company chiefs – Mr. Adam, Mr. Ebanks and Chief Operating Officer Ian Tibbetts. All in all, a full 90% of the about 250 staff is Caymanian.

Forty years ago Cable & Wireless looked very different from what it is now – both in size and technical norms. Introduced to the Cayman Islands just 15 years ago, since 1999 Mobile telephone service has been fully digital. Now there are more mobile phones than people in the country, and Cable & Wireless has more than 50% of that market.

The growth in the Cayman captive insurance industry started in the 1970s.

Now it is obvious that the captive insurance industry in the Cayman Islands is very interesting to people and that its popularity is growing. This year, the Cayman Captive Forum was visited by at least 200 more delegates than last year.

This fact was indicated at the opening of the forum at the Ritz Carlton, Grand Cayman.

This year about 750 delegates came to the forum, while last year there were 540, which was also a record then.

About 60 speakers participated with 20 presentations at the conference.

Yesterday, in the Legislative Assembly, the Cayman Islands Government tabled the Strategic Policy Statement for 2007 - 2008 financial year. The Strategic Policy Statement indicates the policy and financial parameters to be used by the Government in order to prepare its 2007 - 2008 Budget (which ends on June 30, 2008).

According to Leader of Government Business, Mr. Tibbetts, the 1st point of the Government’s fiscal strategy is to achieve compliance with the Principles of Responsible Financial Management. The Government aims at an operating surplus and positive growth in the net worth balances. Also, cash reserves are intended to be maintained at or above required levels during this financial year. This means that at least 75 days of cash reserves in 2007 - 2008 rising to 90 days of cash in 2008 - 2009 and 2009 - 2010.

The intended Net Debt Ratio is to remain below the 80%, which is maximum permitted by law.

However, in accordance with Mr. Tibbetts, the borrowing ratio is the the key one as it measures the ability of the Government to repay public debt by means of comparing the amount of interest and principal repayments to the level of Government revenue. This ratio is predicted to rise steadily during next 3 years, reaching 9.90% in 2009 – 2010, which, however is still below the maximum permitted by law.

The Strategic Policy Statement provides for a USD 332.2 million capital development program to have advance achievement of the broad outcomes over the 2007 - 2008; 2008 – 2009 and 2009 - 2010 financial years.

In order to finance this capital program, the Government is going to use cash from both operating surpluses and borrowings. Over the next 3 years total new borrowings are planned to amount some USD 300.3 million.

It is a well-known fact that financial services are a main stay of Cayman economy. Many of the attributes that develop the financial industry of the Cayman Islands like banking and mutual funds have stimulated the growth and successful work of the captive insurance industry.

Industry practitioners offer are the services they are competitive in and they have good knowledge of global businesses which they apply to Cayman’s financial services. Therefore the jurisdiction is firmly established as the domicile of choice for companies looking for a formal self-insurance programme providing actuarial risk coverage and maximum profit retention.

About 700 captive insurance companies are registered in the Cayman Islands. Most of them are captives related to healthcare.

The Cayman Islands is an active member of the Offshore Group of Insurance Supervisors affiliated with the International Association of Insurance Supervisors (IAIS), the organization that sets out fundamental principles for effective insurance supervision as well as helps to develop insurance standards.