Cayman Islands Issues 40 New International Insurance Licenses

The Cayman Islands Monetary Authority (CIMA) recently announced it issued a total of 40 new international insurance licenses last year. This marks the highest number of licenses granted in a single year in over a decade.

Breaking down the licensing statistics for the fourth quarter of 2023, CIMA issued 15 new international insurer licenses between October and December. These include eight B(i)s, six B(iii)s, and one Class C license. Additionally, two new portfolio insurance companies received licenses during this period.

In addition to the 40 new international insurers, CIMA granted licenses to 8 portfolio insurers and 1 Class D open market reinsurer. Notably, traditional single-parent captive insurers under the B(i) license category experienced growth in 2023. The B(iii) license class, which involves a majority of third-party business, witnessed a significant increase in numbers, driven by the attraction of new reinsurers, particularly in the life reinsurance sector.

As of the end of the fourth quarter, the total number of licensed Class B, C, and D insurance companies in Cayman has reached 683. This represents the second-highest count of such companies in Cayman since 2017, showcasing the continued growth and attractiveness of the jurisdiction for insurance entities.

The premiums written and total assets managed by licensed insurance companies in Cayman experienced a noteworthy surge in the fourth quarter, doubling to $58 billion and $139 billion, respectively.

Kieran Mehigan, Insurance Managers Association of Cayman (IMAC) chairperson, emphasized, "The industry recognizes CIMA's pivotal role in facilitating this robust growth through their proactive engagement, responsiveness, and transparent licensing procedures. The conducive conditions that fueled the unprecedented new business in 2024 have set the stage for an exceptionally promising year in 2025."

CIMA said an additional 12 license applications are currently under review.

The table provided below illustrates data sourced from the CIMA website, depicting key figures across the years 2019 to 2023.

The Class B license category within the insurance law encompasses various types of captive insurance companies, such as pure captives, special purpose companies (SPCs), group captives, association captives, special purpose vehicles, open market insurers, and rent-a-captives. Class B is further divided into three subclasses: Class B(i), Class B(ii), and Class B(iii), based on the percentage of related business that the captive engages in. Related business refers to business originating from the captive's members or a related group, as determined by CIMA.

Class B(i): Captives writing 95 percent or more related business with a minimum capital requirement of $100,000.

Class B(ii): Captives writing more than 50 percent related business with a minimum capital requirement of $150,000.

Class B(iii): Captives writing 50 percent or less related business with a minimum capital requirement of $200,000.

Most single-parent captives typically fall within Class B(i). The subclasses allow CIMA to distinguish between captives, setting specific capital requirements based on their business profile.

Class C: This license category involves entities engaged in reinsurance through insurance-linked securities, such as catastrophe bonds, sidecars, collateralized reinsurance, or similar instruments.

Class D: The Class D license category covers commercial reinsurers conducting reinsurance business and other approved activities.

PICs

An SPC (aka protected cell company or segregated account company) may incorporate one of its cells by establishing a PIC under it. Once the PIC is registered with CIMA, it may write insurance business in its own name as a separate legal entity—an exempted company limited by shares.

Several key features make PICs a noteworthy and versatile option.

• A PIC can contract with other cells and other PICs within the SPC, which facilitates reinsurance, quota sharing, and risk pooling.
• Although the PIC is controlled by voting shares by its SPC, participating shares can be issued to those with an economic interest in the PIC.
• A PIC can have a different board of directors from that of the controlling SPC, providing for greater governance flexibility.
• The PIC is recognized as a separate legal entity for US tax purposes, including having its own federal tax identification number.
• A PIC can be wound up without affecting its controlling SPC or other PICs, or a PIC can merge with another captive.
• A foreign captive can redomicile to Cayman as a PIC where it may not be of sufficient size to operate as a stand-alone captive.

Mr. Mehigan is pictured above. (Photo courtesy of IMAC.)