Southport Re (Cayman) Ltd, the reinsurance subsidiary of New York City-based private equity firm Southport Lane, has become the first insurer in the Cayman Islands to take advantage of the jurisdiction’s recently amended Insurance Law by changing its company classification.
Southport Re migrated from Cayman’s Class B captive license to its new Class D open-market reinsurer license.
Both classes of insurer are fully regulated by the Cayman Islands Monetary Authority, but, as a Class D reinsurer, Southport Re is now required to operate an office in Cayman.
Under the previous classification as a captive insurance vehicle, Southport Re could be managed by an administrator without a physical presence on island.
Moving to a Class D reinsurer shows that Southport Re’s owner, the Southport Lane private equity and asset management firm, is serious about growing the contribution reinsurance makes to its balance sheet and delivering larger returns from reinsurance to its investors.
Glenn Weber, CEO of Southport Re, said, “Southport Re continues to view Cayman as an attractive location for our reinsurance business. The common-sense approach to regulation, and the knowledge and experience of CIMA staff combined with a great service sector, makes the Cayman Islands an ideal location for us.”
The move confirms Southport Re’s intention of expanding its insurance and reinsurance platform. Last year, Southport Re parent Southport Lane acquired Redwood Reinsurance SPC, Ltd, a Cayman Islands-based reinsurer that provides treaty reinsurance for workers compensation and general liability insurance in the US. And in March of this year the private equity and asset manager completed the acquisition of Dallas National Insurance Company, a Texas-based property and casualty insurer specialising in general liability and workers’ compensation.
“Southport Re is a significant addition to our financial services community,” said Dax Basdeo, chief officer in the Ministry for Financial Services. “Southport Re’s decision to migrate from a Class B to a Class D insurer underscores our strength and competitiveness in our reinsurance sector”.
Other reinsurers domiciled in the Cayman Islands as Class D reinsurers include Greenlight Re, the reinsurance firm backed by hedge fund Greenlight Capital.
CIMA Director Cindy Scotland said the amended Insurance Law enhances Cayman’s capability to effectively regulate the risks inherent to different licensees in the insurance market. “This is a key reason for differentiating between captives and reinsurers,” she explained.