Financial services buoyed by strong demand for entity formations

Cayman’s financial services sector received a boost in the first months of this year with strong growth in fund, company and partnership registrations.

In the first quarter of 2021, the total number of mutual funds regulated by the Cayman Islands Monetary Authority increased by 329, or 2.8%, to 12,225. At the end of March, the number of master funds (3,077) exceeded 3,000 for the first time since they required a separate registration in 2012, while registered fund numbers (8,134) are at the highest level since 2013.

The growth in fund registrations during the period follows a year of stellar returns for the hedge funds industry in 2020. In the first four months of 2021 this trend continued, as hedge funds overall recorded a return of 8.68%, as measured by Hedge Fund Research’s Fund Weighted Composite Index – their best performance in more than 20 years.

Last year, Cayman’s fund numbers benefited from new legislation that required private and limited investor funds to be registered for the first time with CIMA.

In the first quarter of 2021, the number of limited investor funds alone increased by 14.9% from 583 to 670.

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Private funds registrations also increased with the total number of registered private funds reaching 13,219 by the end of March. This was 4.1% more than at the end of 2020.

The first quarter also saw increased activity in company and partnership registrations.

Although new company registrations declined slightly last year, from 12,736 in 2019 to 11,688, company terminations also declined. This resulted in 2,699 companies being added to the register, bringing the total number of active Cayman companies to a record 111,568.

In the first quarter of 2021, Cayman registered 4,650 new companies, while 1,926 companies were struck off.

Partnership formations followed an even more positive trend in 2020, which saw new registrations increase to 4,510 and terminations decline to 1,641, pushing the total number of active partnerships on the register to a record 31,144.

In the first three months of this year, service providers registered 1,411 new partnerships, with 389 partnerships struck off.

In the insurance sector, the number of locally operating insurance companies dropped by one, to 26. International captive insurers and reinsurers increased by four, to 656.

During the first quarter, CIMA issued six new insurance licences – five captive insurers and one portfolio insurance company.

The banking sector continued its perpetual decline from more than 600 banks in the late 1990s to 121 today – three fewer than at the end of 2020.

After a positive 2020, trust formations were mixed in the first quarter with 17 new trusts on the register compared with seven terminations. Meanwhile, CIMA-registered trust companies dropped by one, to 141. In addition, the number of registered controlled subsidiaries dropped by one, to 43 and private trust companies decreased by four, to 141.

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