18 June 2020Cayman analysis

Leaders of the pack: at the cutting edge of Cayman captives

In attendance:

  • Ruwan Jayasekera, head of insurance supervision, CIMA
  • Dwight Merren, relationship manager, Butterfield
  • Kevin Poole, deputy managing director, Artex
  • Al Rhodes, president, SIGMA
  • Suzanne Sadlier, deputy head of insurance supervision, CIMA
  • Jude Scott, chief executive officer, Cayman Finance
  • Melissa Thomas, forum committee member, IMAC, and director at Aon
  • Adam Vanicek, senior manager, Grant Thornton
  • David Watt, partner, KPMG
  • Moderator: Wyn Jenkins, managing editor, Captive International

How would you characterise the health of the Cayman captive insurance sector?

Ruwan Jayasekera:

Last year was the end of an era. If we look at the last decade in terms of new formations, Cayman added 338 new captives, an annual average of 33.8. From 2017 to 2019, Cayman added 33 new formations each year.

These results are encouraging, but the actual growth of the insurance sector is even more encouraging when you consider the number of new shareholders and members added to group captives.

Based on the programmes we’ve seen, the sophistication and the dollar value of the re/insurance transactions are growing. Overall, it’s been a good decade for re/insurers including captives in the Cayman Islands.

Historically, new captive formations and activities of existing captives were more prominent in hard markets, but now even in soft markets, captives are being formed, indicating that the Cayman Islands has managed to maintain a consistent growth in both markets.

There is increased competition from the US onshore compared to 10 years ago with more and more states adopting captives legislation, but there’s no evidence that Cayman’s growth has not been impacted as a result. Cayman has lost a few healthcare captives through consolidation, but more often than not, such captives survived and have got bigger and better.

Suzanne Sadlier:

There’s definitely been a shift in the landscape of captives. While we continue to have a very strong healthcare captive industry, we’re really seeing diversity in the risks that are being insured here. For example, there have been coverages sought for various insurtech initiatives, ranging from digital assets to big data to telematics.

We also have licensed medicinal cannabis captives for risks arising from Canada, where it’s federally recognised.

We’ve also seen a lot of growth in the group captives. We report our statistics based on the numbers of new formations and re-domiciles to the jurisdiction. Asset growth, in particular, has also increased significantly in the last few years with group captives contributing towards this expansion.

In some cases, the group captives have been so successful since formation that they have outgrown their initial plans and targeted number of members. As a result, certain members then form a second captive to ‘spill over’ some of the membership and split the risk profiles further, particularly as their risk management frameworks become more mature.

Jude Scott:

We see continued strong growth and overall, the consolidation has now shaken out. That has been a positive trend for Cayman. The book of business continues to be strong and stable as do the growth and premiums, I think we’ll continue to see more demand for the Cayman product—in particular those who have structured multiple products here.

They’ve developed a good product that works well for the jurisdiction and for clients and we continue to see a lot of demand for that and the services here support our clients extremely well.

We have done a great job of responding to changes—regulatory and otherwise—and converting those into opportunities. When we look at things such as economic substance, because Cayman has developed a very deep talent pool and a great infrastructure, that will make us even more attractive as a jurisdiction.

In contrast, other jurisdictions may struggle because they don’t have the same infrastructure, technology, legislation in place, or talent pool on the ground. We’re well positioned to create awareness with clients and, where necessary, scale up the service.

David Watt:

Everything is stable for us. We’ve seen consolidation in the healthcare space but, as a natural progression, we’re also seeing growth and diversification. We’ve seen things like the crypto-related captives being formed and I expect further diversification.

Adam Vanicek:

The big thing we’re seeing is the diversification of risk. We’ve got a few new life captives. We’ve also seen the consolidation of healthcare, but in many cases the surviving captive has remained in Cayman.

We’re seeing digital assets being brought into re/insurance strategies. Whether part of the captive’s investment strategy or used as a hedge against loss exposure on unique covers, bringing digital assets into the captive landscape proves Cayman’s captive landscape is dynamic.

We’re also seeing different structures being used. We’ve seen a lot of new formations using special purpose company structures.

We’re well poised to fight this battle and we’ve got the talent pool here to serve clients well.

Melissa Thomas:

We are also seeing more reinsurance structures and crypto and digital assets. IMAC commends CIMA for the speed and efficiency with which they’re processing all these licence applications, given the diversification and emerging risks, and the flexible regulatory approach that they take.

I would also echo that one of the largest strengths of the jurisdiction is the depth of expertise in the service providers, all the award-winners here around the table. It is fantastic that this survey has been able to showcase the talent we have here.

Al Rhodes:

We work with a lot of brokers and the big increases we’re seeing in the captive formations are coming from the smaller brokers, ones that maybe 10 years ago had either never put a captive together or weren’t very knowledgeable about captives. But every time there’s consolidation on the brokerage side, some talent ends up in a smaller broker, maybe a regional broker, and we see an uptick in captive interest.

It’s been a long time since we’ve seen a downturn in captive interest. It just continues to go up. There was a trend a few years ago of captives moving domiciles, some going onshore. Now, captives choose the most attractive jurisdiction on merit. The whole idea that Cayman is different from some of the onshore domiciles has completely gone away in my view.

Kevin Poole:

There are many positives. The number of individual cells is over 600 now and we’ve been seeing the formation of more portfolio insurance companies (PICs). Looking at the stats at the end of December, there were 27 PICs and that’s definitely a growth area in the last couple of years.

Also in terms of where business coming from, we’ve licensed a couple of Australian companies, others from the MENA region, and there are also enquiries from other territories such as Latin America and Canada. Although Cayman continues to attract many US clients, there’s more of a geographical spread emerging.

Some of that is due to relationships and also our reputation. These new clients will have looked at different domiciles including Bermuda and European domiciles, but Cayman does very well when you are starting off the new captive. Cayman’s regime is no less stringent but very favourable and well regarded.

I agree with the notion that more smaller and independent brokers are bringing business. We work with a lot of independent brokers who are getting into the captive space. Also, on the capital markets/ILS side of things, we are seeing more interest and that is also an area we hope Cayman can try and grow.

Sadlier: Our Insurance Law 2010, the main legislation for insurance in the jurisdiction, has a lot of inbuilt flexibility which has been helpful for some of these startup companies from Australia and Canada and especially with emerging innovation in the insurtech space.

In other regions regulations can be more prescriptive. It can be more difficult to be innovative and launch new ideas and new risks and that’s one of the reasons that we’re seeing an increase in business from those jurisdictions.

People look at Cayman and our regulatory framework and they can see that it’s very proportionate, very balanced and fair, but it also allows that platform to start up with creative ideas as long as they’re sound from a risk management standpoint.

Poole: I agree. We always encourage new clients to come down and meet with CIMA before they’re licensed because it helps talking through things especially if it’s something a little bit unusual. CIMA can talk to their experience—maybe they’ve come across similar things.

Jayasekera: CIMA remains an accessible regulator and we have always encouraged companies to meet with us when they travel to Cayman for board meetings or whenever CIMA staff travel overseas to attend conferences, even if they don’t have any significant issues to discuss. We attend about 250 licensing meetings every year, with around 50 of these meeting happening during the Cayman Captive Forum.

It’s about accessibility for us. We are regulators, we would like to receive first-hand information on industry developments and how the boards and senior management see their Cayman re/insurer’s performance; this type of interaction also helps us to understand the new technologies, the new concepts out there and how captives are being used to cover emerging risks.

Dwight Merren:

I agree on the importance of the relationship side of thing with CIMA. In terms of the banking side, I can say that the bank balances are very strong. We haven’t seen any declines in that area, and we’re also seeing enquiries for asset management services and larger credit facilities to go along with the corporate banking accounts.

From a banking perspective, things are very strong. I feel that Cayman is definitely one of the strongest players in the market, having been around for so long. The service providers have deep expertise and are within arm’s reach of each other, which is a benefit. We have a unique model here and it’s very healthy.

In terms of crypto, which has been mentioned, the bank has not made any decision to engage in the business at this time. However, as things change, I believe there may very well be a possibility, in terms of the future as the market evolves.

Do onshore domiciles continue to be a threat to Cayman?

Jayasekera: A captive often is a versatile vehicle with high level of flexibility built into its programme and operation, and this understanding from the service providers and the regulator is key for a captive jurisdiction to do well. It is easy to replicate and adopt someone else’s captive legislation or regulatory framework but that doesn’t necessarily make a jurisdiction an effective place to do business unless that jurisdiction has the experience and expertise.

In the Cayman Islands, approximately 90 percent of the re/insurance business come from the US. In the last 10 to 12 years, many US states have adopted captive insurance legislation, but that hasn’t affected our growth in terms of numbers and expansion. So yes, at captive board level, the decision of onshore or offshore is now discussed more than before but there are several other factors to consider when selecting a domicile.

As a leading financial services centre, Cayman takes international standards and best practices seriously, and where necessary tries to align its regulatory framework with the international standards. We engaged with other regulators including the US and make it a point to explain our framework to give them the comfort that we are a domicile with experience, expertise and a world-class legal and regulatory framework.

All this will have contributed to business continuing to come from the US.

Poole: We haven’t seen a decline because of growth of US domiciles. There does seem to be a pipeline of opportunities of more mainstream middle-market single parent captives, so perhaps there are opportunities for growth in those areas.

Whether they go to US domiciles or they come to Cayman, we’ll wait and see. But I know we have a large number of middle-market prospects at the moment and they’re seriously looking at Cayman. I don’t see there being too much to worry about in the immediate future.

Thomas: I would add that a lot of those smaller onshore domiciles don’t have the scale to compete with the regulatory infrastructure and the service provider network we have in Cayman.

Sadlier: That is due to the interconnectedness of the market here. It’s such a small geographical area that you have senior leaders here and experience in the captive market on all types of risks. Trying to recreate that is difficult.

At CIMA, we’re talking to the service providers on a daily basis. We have 27 licensed insurance managers in the jurisdiction who are representing the vast majority of the licensees and they’re representing all the captives. Every single day, we have a dedicated representative within CIMA who is talking to these insurance managers. That cannot be easily replicated.

Merren: It is no coincidence that the IMAC conference always has record-breaking numbers and is one of the largest captive insurance conferences in the world. That’s a very good example of the interest in Cayman and the sort of the networking capacity that we have.

Rhodes: In the last half of the year we always see an increase in interest in captive formations. Every year, the interest grows but this past year, it really took off. From our perspective, even if some of the onshore states got a few more captives, I don’t think it would take away from Cayman in terms of absolute numbers. There’s just too much interest out there.

The wider hard market will have an influence but that is one of many factors. The fact that the 831(b)s are not going to be formed quite as frequently as they used to be, and the fact that there is a hardening market, combine towards more traditional or single parent captives being formed.

In the US, there is no specific state coming to the fore so the growth for Cayman is still very strong.

Sadlier: Another factor is that our political landscape is very stable and that’s another reason we’re seeing continuing formations here. It can be very difficult in other jurisdictions if there are changing governments with different views and support for and against the captives industry.

In the Cayman Islands for a long time, the financial services industry is very well supported by government and in particular the captives sector. That means people can take a long-term view and they don’t need to worry about political changes. It doesn’t particularly matter for them about the political party that’s in power because there’s very long-term support for the industry.

What is the likely impact of regulatory initiatives such as economic substance, and the fact Cayman did not seek Solvency II equivalence?

Jayasekera: From an insurance regulatory point of view the economic substance rules, in terms of what they are trying to achieve, are nothing new and therefore will not have much of an impact on the re/insurance sector. As regulators, we have always looked for real substance and economic activity in our captives, in our re/insurance companies and in our insurance intermediaries.

Every time we get a new licence application, that’s usually the first question we ask: what’s your primary business objective and purpose of this vehicle? If it is anything other than legitimate risk transfer and/or risk management, we’d say no to the application.

We want people to use re/insurance and captive entities for proper risk transfer, insurance, reinsurance purposes and use service providers with experience, knowledge and use the responsibility and the accountability of a board of directors. These are the things that we always check and we will continue to check. I don’t think substance requirements are going to change anything.

We also work very closely with the global standard-setters such as the International Association of Insurance Supervisors (IAIS) and the Financial Action Task Force. IAIS has issued a paper on captives and I firmly believe Cayman has adopted more than the minimum international standards. Captives in the Cayman Islands operate exactly the same way they operate in Europe or the US, so as far as the economic substance requirements are concerned, there should not be any fundamental changes to how captives operate and are managed in Cayman.

Even the insurance managers are licensed in Cayman, which is not the case in some jurisdictions. The insurance managers have people on the ground and have proper controls and record-keeping on the island.

Watt: I agree that having been dedicated to this portion of the market for the longest period of time, it has more substance than probably almost any other part of our financial services market. We’re well placed to comply with whatever requirements come down the pipeline from an economic substance standpoint.

Most of the core income-generating activities happen here already and the insurance managers play an active role, and they are licensed.

There’s been some debate around actuarial services, and those discussions will continue to evolve, but from our perspective, the bankers, the auditors, insurance managers, they’re all here. Living here. Boots on the ground. Servicing the market, operating the entities as they would. They take ownership of those entities. So from our perspective we’re well placed.

In terms of Solvency II, some 85 percent of our business emanates from North America, from the US. We would do ourselves no favours by implementing Solvency II in the shorter term. Our current model has served us well for the last 30+ years. From our perspective we just stay the course until something changes in the marketplace that demands we take another look at Solvency II.

Sadlier: We’ve spoken about the insurance core principles of the IAIS—those are the international standards to be upheld by regulators on a global basis. Solvency II is just an interpretation of that. It’s a particular regime that’s utilised in Europe as an interpretation of how they wish to implement those standards.

There are alternatives to that and there is no reason why one is necessarily better than another in terms of a framework. The National Association of Insurance Commissioners (NAIC) has its own framework, other jurisdictions have theirs. In Cayman we have our own framework that is proportionate and balanced, and we regularly benchmark ourselves against those standards.

We don’t see a lot of European business here. Even if we did, there’s no reason why our framework can’t handle that risk or business. It’s just a different way of looking at it. Solvency 2 itself is very prescriptive. It’s very detailed. We take a different approach. Our legislation has in-built flexibility, we have permissions to impose enhanced capital requirements or conditions to a licensee to any effect.

It really means that we get to look at the licensee on a one-on-one basis and have that discussion with them. They may not even be able to get that far in another jurisdiction because the legislation in another jurisdiction may be very prescriptive or it’s a simple ‘no’. When they come here, we can have those discussions and make sure it’s a comfort level for risk that we’re willing to accept, and if that means additional conditions or capital requirement, then so be it.

We can’t control external considerations or external risks. All we can do is look to what we’re doing, continually benchmarking ourselves against international standards and if there’s a misinterpretation or misunderstanding from international counterparts, then we’re always ready to address that and to be in a position to explain our framework.

We regularly participate in international meetings, the IAIS being one of them. In August 2018, we signed a memorandum of understanding with the NAIC in the US, and even though we’ve had a longstanding relationship with various state regulators, that was really cementing and enhancing our international cooperation at a higher level with the US.

Similarly, we are currently president of the Caribbean Association of Insurance Regulators. We coordinate a lot of engagement across the Caribbean which is particularly relevant for any groups that have more than one legal entity across the Caribbean. We’re vice president of DITs which is the group of the offshore regulators, and we take that international cooperation very seriously. We do it on a proactive basis and a reactive basis to support why our regime is as it is.

Thomas: We’re really fortunate as an industry to already be populated with credible insurance companies who are recording their income in their parent’s jurisdiction. This really becomes a fine-tuning exercise.

Poole: With all our clients, we need to address economic substance to determine what their standing is. A large number of them are carved out because they’re tax resident outside the island, but for others we’re looking at the rules and regulations to make sure that the core income generating can be demonstrated. The majority of them, or all of them, have been directed and managed in the Cayman for many years anyway.

It’s up to us as managers to try and manage the increased regulatory requirements, whether it be economic substance, or any other changes to rules and regulations, but so as long as we’re not overburdening the clients through being in Cayman I don’t think we need to worry.

Watt: Economic substance is less of an issue compared with beneficial ownership and the public register being developed. That’s more concerning to our client base, or some aspects of our client base, than economic substance, for the captives market specifically.

They value their privacy. People don’t want unnecessary information about them being published on a public register. If someone had their say, I don’t think that’s something they would opt for.

Sadlier: For clarification, although there’s the question around whether that becomes publicly available, on the insurance side we absolutely look at beneficial ownership. It’s not a new consideration for CIMA and it wouldn’t require additional requirements or licences.

We do look to ultimate beneficial ownership of our companies, it’s information that we have to hand. It’s important to us so that we have comfort over who is behind the entities we license. The question remains whether they become public or not.

Merren: Certainly from a banking perspective, we have that information for similar reasons—eg, tax declarations for reporting purposes. It’s just part of the norm nowadays and we have people submit the documentation.

What are the factors driving an overall increase in interest in captives?

Watt: I’ve sat through a couple of board meetings with larger clients, it’s not so much the sort of loss outcomes that are driving the hardening of the market, it’s the decrease in capacity.

Players that were historically providing capacity on certain lines have decided to pull away or out of the market—maybe not entirely, but partially, and that creates pressure on pricing from the ground up.

Sadlier: Also, in a low interest rate environment, there’s a lot of capital shifting towards the alternative capital markets towards catastrophe risk, etc, as a way to make a return. But some of the natural disasters that have been prominent in the last few years have perhaps scared away some of these investors, meaning a withdrawal of capacity. So yes, we hear that the hardening market is a result of the reduction of capacity.

Poole: There are certain lines of business that have definitely seen the market hardening, including auto liability and property.

"Cayman is in the fortunate position that the market itself is very joined up so all the service providers are here and work very well together and are familiar with each other." Kevin Poole, Artex

Thomas: All that has meant not just new formations or new lines of business in existing captives, but also an interest in having a captive available as a key strategic negotiating tool when you’re working with the insurers. It is about having one available that you can use if need be, even if you don’t end up doing so in the end.

What sort of innovation are you seeing in the captives space?

Sadlier: The risks themselves are inherently changing, as people’s needs for insurance have changed significantly on the back of some of the innovation. Looking beyond traditional property and motor, everything we do is technologically driven now. Every part of our behaviour is continually evolving with technology and continuing innovation.

The way insurance is purchased and risk transferred is continuing to evolve on the back of different risks. Driving behaviours, for example, couldn’t have been talked about 20 years ago because people weren’t on their mobile phones. It’s all these minor shifts in the risks that are inherent in what we do every day.

I don’t necessarily think that Cayman is taking on all sorts of different risk that it didn’t previously, it’s just that globally the risks have changed significantly and are going to continue to do so. We continue to be the best place to assess those risks and build in controls and conditions to our licensees in the beginning. Especially as there are challenges in the commercial market and obtaining coverage or capacity, a captive can be a solution to do that. It’s a way to better manage and understand the risks themselves.

Vanicek: It’s also needs-based. A lot of these new coverages are unique, they’re niche, they’re bespoke, they’re tailored, they’re coverages that aren’t necessarily priced by the market. The market is hard in some areas, but I wouldn’t call the market hard for some of these bespoke risks.

We’ve seen clients that have a very niche need for a specific type of coverage and no-one knows how to price it. That’s why they come to Cayman because they can create an entity that is specifically designed to meet their insurance needs.

We are also seeing innovative structures. The PIC legislation that came out several years ago has helped. I had a client that started off as a regular pure captive then put the PIC in place. The opportunity is there if the owner is truly sophisticated. It is going back to the fact that Cayman is a choice jurisdiction because of the expertise within the industry, across all service providers. If they’re using that expertise, captives can be used to write those unique coverages.

Poole: We have seen similar use of PICs; we have those in the ILS space. We’ve also had a few enquiries from people who think ILS is the answer, so there is a bit more awareness of different structures and things out there with captives and other structures.

Rhodes: What we’ve seen is that some brokers, the smaller brokers, don’t like the group captive idea. May be they had some clients in the group captive that didn’t like it that much but they’re intrigued by anything that would be considered, such as an incorporated cell where the cell structure is going to be protected. That seems to be the interest we’re seeing, as far as different types of structures.

Watt: There is growing interest in blockchain. It can increase productivity and makes your business lines more productive and efficient, but right now it’s cost-prohibitive. You’ll see some people dabbling in it and using other technology such as AI or RPA to make their business more efficient and productive, but I think full-on blockchain solutions are a way off for your basic day-to-day captive.

Scott: We’re going to reach a tipping point—the original design and intention for implementing blockchain into financial services had some fundamental barriers. Originally many blockchain technology promoters desired that it be developed on the basis that it would be anonymous, and not subject to any sort of regulatory oversight. It was purely based on speed and efficiency.

There weren’t really any standards in place for it, so when we look at the stability of a regulated environment, that brings tremendous challenges. But I think we will see the evolution of a very sophisticated closed or permission-based blockchain environment.

One of the projects we’re working on in Cayman is a customer due diligence ID (CDDID) project that will be a regulated platform where technology firms, such as compliance techs and regtechs can be licensed to perform certification for AML and issue a digital certificate.

That can then be used to transact within a closed permission environment, which allows them to have more standardisation. It allows the quality of the coding to be enhanced, so the predictability of the transactions improves. It also then addresses some of the other fundamental challenges that come with blockchain and haven’t been fully resolved yet.

That would take care of the AML piece, so known parties transact with other known parties. The next part of it ensures that you can have an environment where it’s clear if a transaction is fraudulent or if a transaction fails, that you have legal recourse. The parties are known and it can then be established in that closed environment what laws govern the transactions.

There is also the tax element. A lot of jurisdictions have been reluctant to embrace this technology with global financial services because when you’re dealing with anonymous or pseudo anonymous parties, it creates great difficulties for taxing authorities.

In the proposed properly structured closed environment where AML is effectively addressed digitally, the main concerns of taxing authorities will also be addressed. It also allows large dollar transactions, so for example if you have a captive or an insurance company, if they have a claim they want to have certainty that they’re going to be able to recover that claim. It brings certainty to the transactions they’re entering into.

When you then add those together with the speed and the efficiency that’s built in to the blockchain environment with peer-to-peer transactions, I think that’s going to be tremendous.

What we have to build into it is to ensure that, for example, we’re working very closely with the regulator, so that the safeguards that are necessary from a regulatory perspective are also built into an environment.

We’re going to see more stability and recognition of digital assets. Cryptocurrencies have struggled because anyone can launch a cryptocurrency and then the question is valuation of it, and how do you safeguard custody? When you move to a closed permission environment you start creating an environment where you can ensure that you can differentiate between legitimate and illegitimate cryptocurrencies.

When you then apply AI we have very exciting and interesting future. There is a lot of opportunity, but it does take us thinking outside the box.

Sadlier: All this is on the radar, but it’s not something we’re seeing dominate the licensee discussions. On the captive side a lot of parent companies, particularly if you take the healthcare industry, have set up dedicated units for technological innovation and fintech and insurtech trying to explore all the possibilities. From blockchain to big data analytics, AI, etc, they are trying to consider it all.

Some of that discussion is coming to the captive boards as well. People are trying to better manage their risk by identifying that through innovations. On the reinsurance side here, companies are looking to invest in tech startups and minor investments, trying to better their understanding of the risk instead of pushing capacity to cover the risks. If they go in on the investment side it allows them a period to better understand the companies.

Any final thoughts?

Rhodes: I keep going back to the small and mid-size brokers, the regional brokers. I think Cayman is a great opportunity for them, mainly because of the infrastructure and the regulatory structure here.

Poole: The future is rosy, from the number of enquiries coming in and I don’t think anything is going to slow down soon. Cayman is in the fortunate position that the market itself is very joined up so all the service providers are here and work very well together and are familiar with each other, and we have CIMA as well. Being flexible and approachable is a definite positive.

Merren: Our big advantages are accessibility and the facilities, the access to CIMA, the managers, the auditors, the legal advisors—being a one-stop shop is a very positive thing. Cayman’s track record is extremely buoyant.

Sadlier: We’ll continue to see the growth in the jurisdiction in an increasingly diversified market, although it is very diversified at present. The licensing number, 33 each year over the last three years, is not reflective of the level of enquiries. Because of our gatekeeping and risk assessment not every enquiry that has come through has resulted in the formation of a captive.

We look through the rationale and purpose for establishing a captive. The 33 are what has been licensed and got through in the last year. We continue to be very aware of the emerging risks and we assess how prudent and realistic it is to be able to license and effectively supervise those companies we’re seeing coming from other geographical regions and different risks.

The growth can be attributed to the strength of the service providers here, and the interconnectedness of the market that I don’t think is replicated elsewhere. We have great ease of access to the service providers here and that’s when you see the enquiries come to the ground—they can very quickly meet with the audit firms, the insurance managers, the actuaries, the government and with ourselves, and kind of gauge that. That’s going to keep us busy for the next few years.

Thomas: I would commend Cayman International Insurance for the good work the organisation does in promoting the jurisdiction and informing the world on the innovative things we’re doing here, and why Cayman is such a great place to do business. We have the world’s largest captive insurance forum here: 1,500 attendees, world-class presenters, service providers, captive owners, directors, shareholders, all in attendance.

Vanicek: We’re in a dynamic environment, being in Cayman: we’ve got the increase, 33 captives a year, the decade of 300-plus. We’re showing that we’re able to keep up with the times having the new access to the crypto or cannabis approvals for different types of coverage.

Those different types of coverages, or those nuances to economic environment in which we live is going to continue to grow and the regulator as well as everyone in this room has been quite adaptive and able to cope with these different kind of economic conundrums.

This next year we’re going to see the same kind of growth, with even more different types of coverage. We in Cayman really are in a unique environment.

Watt: We audit about 35 percent of the 600-plus odd captives that are here. I like to follow the money—there are many companies investing heavily, not just here but across the region. Investors must be seeing something in Cayman that makes them want to continue coming here and investing in the capital space. When we look at the strength of the US economy, you’ll continue to see growth in group captives, because that is just a natural accelerator to growth in group captives.

You have the low interest rate environment, you have the hardening of the market, and you have the peaking of equity markets. If people are looking for alternatives they’re going to focus on something like the captive sector, which is most efficient use of their money.

Cayman is poised for growth because of all those factors. Follow the money: people are investing here heavily. They see Cayman as having a bright future.

Scott: Cayman has done a great job of building such a strong platform and I’ll always go back to the fact that it starts with the quality of the people in the industry and the regulator. Our government is focused on this industry and on captives.

We continue to build and innovate on that. When we look at challenges or changes, we embrace those and we have a regulatory environment that’s supportive of dynamic change. The ability to look at innovation in the marketplace is tremendous.

We have a history of being able to dynamically respond to changes and then create a better environment for our clients. That’s going to be a catalyst to continue what we’ve already been seeing the last couple of years, which I refer to as a flight to quality.

More clients are looking for jurisdictions like the Cayman Islands that have the expertise, uphold high standards, and have a clear and transparent tax-neutral environment that provides benefits to clients but doesn’t cause tax harm to other countries.

We work very closely with our clients to understand their evolving needs. As long as we continue to focus in that proactive manner, we continue to build on technology and on our talent pool, there will always be a place as a top jurisdiction for Cayman.

Maybe in the past a jurisdiction such as Cayman could be referred to as ‘offshore’. I think we are now recognised as an international financial centre. We could be anywhere in the world and the quality of service that’s provided by industry, the quality of expertise in our regulator, and the types of product and services we’re seeing are second to none.

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20 December 2019   Welcome to the results of the inaugural Captive International Cayman Awards. In the following pages we reveal the results of a comprehensive survey conducted over many months designed to identify the most influential and highly regarded firms and individuals operating in the market.

More on this story

20 December 2019   Welcome to the results of the inaugural Captive International Cayman Awards. In the following pages we reveal the results of a comprehensive survey conducted over many months designed to identify the most influential and highly regarded firms and individuals operating in the market.