Financial services industry showed solid growth in 2020

In a rollercoaster year that saw tourism grind to a halt amid the coronavirus pandemic, the financial services industry was one of the bright spots in Cayman’s economy.

Statistics for 2020 show growth or stable activity across the spectrum of financial services as firms took lockdown measures and border closures in their stride.

The funds industry, Cayman’s mainstay in terms of financial activity, continued its expansion in 2020 as hedge funds posted a second consecutive year of double-digit returns.

New mutual fund registrations increased by 4.2%. This increase does not include the 583 limited investor funds, which together with 12,695 private funds, had to register with the Cayman Islands Monetary Authority for the first time in 2020 under new regulations.

By the end of last year, 24,008 funds were under the purview of the financial regulator, including a total of 11,313 mutual funds, compared with 10,857 mutual funds in 2019.

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The number of Cayman-based fund administrators, meanwhile, dropped from 81 to 76 in a continuation of a decade-old trend.

Last year, the insurance industry recorded a small increase in Class A insurers, from 26 to 27, and captive insurers, from 646 to 652. In total, CIMA issued 36 new captive licences in 2020, 15 of those in the final quarter.

Pure captives and group captives represented the two main categories, with 281 and 125 companies, respectively. About 21% of the total Class B, C, and D insurance companies were formed as segregated portfolio companies, with more than 600 segregated portfolios.

However, the number of insurance managers dropped from 24 to 23.

Consolidation in the trusts services industry caused a small reduction in the number of local trust companies and controlled subsidiaries but private trust companies increased from 132 to 145. At the same time, more new trusts were formed and fewer trusts terminated through November 2020 compared to first 11 months of 2019.

Although full-year data is not yet available, company registrations were 11.85% lower through November 2020 than in the same period in 2019 but company terminations also fell, by 46.8%.

As a result, the number of active companies on the register is likely to exceed the 111,536 recorded at the end of the third quarter and set a new record high at the end of the year.

This is also the case for new partnership formations, which were 2.8% higher through November 2020 than in the same period in 2019. At the same time, partnership terminations dropped by a quarter, so that active partnerships should have easily exceeded the 2019 total of 28,939 by the end of the year.

On the other hand, offshore banking continued its decline with 123 Cayman-registered Class B banks in the third quarter, down from 125 in 2019.

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