Captives continue to grow

Cayman’s captive insurance sector continued to grow in 2005, with 733 Cayman-licensed captives active at 31 December.

This represents a six percent increase from December 2004 when 693 captives were active.

Captives are entities licensed to write non-domestic insurance business, states a CIMA press release.

During 2005, the Cayman Islands Monetary Authority licensed 59 new captives, while 19 were cancelled.

Total assets of the 733 captives active at year’s end amounted to US$26.6 billion. Premiums written by these entities equalled US$6.7 billion

As in the past, North America was the region of origin and the location of risk for the vast majority of licensees. Eighty-eight percent of licensees (646) were providing cover in North America, writing premiums amounting to US$5.6 billion. This was followed by the Caribbean and Latin America, which made up approximately five percent of total licensees (33) with premiums amounting to US$132.4 million.

Healthcare was the primary class of business for 38 percent of Cayman-domiciled captives in 2005, with US$2.5 billion worth of premiums written in this class. Workers compensation was the primary class of business for 21 percent of captives (155 licensees). Premiums in this category totalled US$1.5 billion. Property was the third most popular category with 10 percent of captives (75 companies) listing it as their primary class of business and writing US$487.5 million in premiums.

Over the last decade, the number of captive insurance companies licensed in Cayman has increased steadily. At the end of 1995 there were 390 active entities. By 2000, the figure was 516. The Monetary Authority’s Deputy Head of Insurance Morag Nicol attributes continued steady growth to the domicile’s ‘strong and established regulatory framework, solid infrastructure, experienced service providers and an ongoing commitment to maintaining business excellence.’

‘The outlook for 2006 is positive,’ Mrs Nicol added, ‘and the continued interest in Cayman as the domicile of choice is expected to be evidenced by further growth in formation of new captives and increased use of existing captives to facilitate the insurance needs of its owners and/or insureds.’

A further development during 2005 that builds on market confidence of the Cayman Islands was the formation the Islands’ first open market reinsurer. With approximately US$250 million in capital, Greenlight Re seeks to partner with risk takers, intermediaries and underwriting managers to provide a variety of capital risk solutions.

‘Greenlight Re is the first Cayman-based global property and casualty reinsurance company and has worldwide reach, specializing in custom tailored reinsurance solutions. We anticipate that during 2006 interest in utilising Cayman as a domicile for such vehicles will continue,’ said Mrs. Nicol.

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