The Cayman International Reinsurance Companies Association (CIRCA) today welcomed the findings of a new Society of Actuaries (SOA) report “International Reinsurance Landscape Overview for U.S. Life & Annuities,” which underscores the Cayman Islands' growing role as an international reinsurance jurisdiction supporting cross-border insurance markets.
"This report provides independent confirmation that the Cayman Islands is a well-regulated international reinsurance jurisdiction, supported by a robust regulatory framework and a risk-based supervisory approach focused on policyholder protection and ongoing regulatory oversight by the Cayman Islands Monetary Authority (CIMA)," said Faramarz Romer, Chairman of CIRCA. "The Cayman Islands is well positioned to provide the capacity and expertise needed to support the needs of global insurers and reinsurers."
The report makes a clear statement about the value of jurisdictions such as the Cayman Islands to the global reinsurance market: "International reinsurance can be an important tool for U.S. insurers in increasing their competitiveness, managing risk more actively, supporting entering new markets, accessing international capital, offering innovative products and managing their balance sheets strategically." (p. 8)
Regulatory framework aligned with international standards
The SOA report highlights the Cayman Islands' regulatory and capital framework, emphasizing that reinsurers in the jurisdiction operate under risk-based capital
frameworks aligned with internationally recognized standards, including the Insurance Core Principles (ICPs) of the International Association of Insurance Supervisors and
overseen by the Cayman Islands Monetary Authority (CIMA).
Reinsurers are required to maintain capital at or above the Prescribed Capital Requirement (PCR), with additional buffers often held in line with rating agency expectations. (p. 40)
Reinforcing this, the report notes that Cayman Islands' reinsurers are subject to clearly defined capital standards and prudent oversight, with capital requirements based on
risk-based frameworks and ongoing supervisory review.
Efficient and transparent reserving framework
The Cayman Islands' reserving framework is noted as a key advantage for multinational insurers. The SOA report explains that reserves are established using internationally
recognized accounting standards, often aligned with U.S. GAAP or U.S. statutory principles (p.87, s4.4.2.) In addition, the report highlights the Cayman Islands' principles-based regulatory approach, noting that the jurisdiction "elected not to pursue Solvency II equivalency allowing for a principles-based, less prescriptive regulatory framework." (p. 38)
This framework supports:
- More consistent and efficient financial reporting across jurisdictions
- Streamlined processes for new transactions
- Improved comparability and transparency for multinational insurance groups
- Enhanced stability through alignment of product design and reporting practices
Strong protections for U.S. cedants
The report also highlights that Cayman Islands' reinsurers provide full collateralisation for U.S. statutory reserves, often with additional over-collateralisation, providing a high level of security for U.S. insurers and policyholders. "Additionally, the collateral assets must be held in a qualified U.S. trust in compliance with all requirements of the Credit for Reinsurance Model Law Regulation." (p. 16)
Supporting the U.S. retirement market
Importantly, the report emphasizes the role of Cayman Islands reinsurers as an important participant in supporting the growing U.S. retirement market. International reinsurance is identified as a key tool to help insurers manage capital and risk while addressing long-term retirement needs.
Strong regulatory cooperation and industry engagement
The SOA report also documents the Cayman Islands' extensive international cooperation, noting that CIMA maintains over 70 regulatory agreements, including with U.S. regulators and engages routinely in transaction-level collaboration. "CIMA has a longstanding reputation as a global regulatory authority. Companies value CIMA's status as a founding member of the IAIS, which underpins its global reputation." (p. 39)