Archive for February, 2012

Captive Insurers choose Cayman

Wednesday, February 15th, 2012

The number of captive insurance companies that have been established in the Cayman Islands increased significantly during 2011. According to the Managing Director of the Cayman Islands Monetary Authority (CIMA) Cindy Scotland, this trend is expected to continue into 2012.

Scotland commented that conditions in the international marketplace have been challenging to the formation of captives over the past several years. However, she noted that there continues to be solid interest in the Cayman Islands that was revealed in a 52% increase in captive formations in 2011.

The Authority ended 2011 with 739 captives and 632 segregated portfolios incorporated in the Cayman Islands.

The jurisdiction continued to be the leader for healthcare captives, which was the primary line of business for 256 companies – 35% of the total. The second largest line of business remained workers’ compensation, which was with 161 companies or 22% providing this as their primary type of risk insured.

As at December 31, 2011, the 739 active captives comprise the following: 419 pure captives (57%), 124 segregated portfolio companies (17%), 75 group captives (10%), 52 association captives (7%), 36 special purpose vehicles (5%), 32 open market insurers (4%) and 1 rent-a-captive.

Gordon Rowell, Head of Insurance at CIMA, said: “In some cases this has dampened corporate sponsors’ motivation to take on the expense of setting up a captive in order to self-insure. Nevertheless, industry players know the value of captives as a major part of organisations’ risk management strategy. The industry has established a track record for robust risk management and in recent years captives and insurance managers have been quite efficient at maximising value despite the soft market.”

Scotland noted: “Given these factors, captive sponsors are seeking the greatest efficiencies and the choice of domicile for a captive becomes critical in achieving this value. The Cayman Islands has fared well because of a number of advantages. Captive participants have told us that in addition to the expertise of local service providers who have built up specialization, especially in the area of health care captive structuring, the jurisdiction is very cost competitive, the process for establishment of the captive is efficient, and the legislative and regulatory framework is stable and robust.”