CEO of US insurance giant asks Trump to halt ‘unhealthy’ Cayman competition

The head of a giant US life insurer has appealed to President Donald Trump and regulators to crush Cayman’s life reinsurance business.

Jim Belardi, CEO of Iowa-based Athene, said action was needed by the National Association of Insurance Commissioners (NAIC) to clamp down on the “unabated” growth of Cayman’s life reinsurance business.

He highlighted that Cayman was home to US$150 billion of life reserves “supported by a fraction of the capital required by the US or Bermuda, which we believe puts the system at risk”.

He was speaking during Athene’s fourth quarter 2024 results call earlier this month, reported by specialist online channel InsuranceERM.

Marty Klein, the insurer’s chief financial officer, said Bermuda had tightened its regulations so companies that had domiciled there to take advantage of its lower reserves or capital rules had lost that edge.

“Some companies are now looking to pivot to the Cayman Islands where the regulatory framework is much less robust, capital requirements are much less defined and there is much more flexibility,” he said.

“Our observation is that companies are going to Cayman to hold lower reserves or, in some cases, lower capital.

“We don’t think that’s healthy for the industry.”

Belardi added that Trump could bring “positive change” to insurance regulations, including blocking EU-style Solvency II rules from becoming the worldwide norm.

The US has avoided the use of the globally-agreed Insurance Capital Standard prudential framework, which is based on EU’s Solvency II rules, with a book-value, risk-based capital (RBC) regime and the introduction of the RBC-based aggregation method.

A spokeswoman for the Cayman Islands Monetary Authority said the idea that Cayman was “unhealthy” competition and had “a more lenient regulatory approach” than other jurisdictions was wrong.

“The regulatory framework in the Cayman Islands is comprehensive, transparent, and designed to meet the highest standards of solvency and risk management,” she said. “Reinsurers are held to rigorous standards, and no transaction can proceed without a written statement of no objection from the relevant onshore regulators.”

She said Cayman regulations were in in line with international standards set by the International Association of Insurance Supervisors.

“Accordingly, the capital requirements for reinsurers operating in the Cayman Islands are designed to ensure long-term solvency and protect policyholders,” she said. “These requirements are regularly assessed to keep up with evolving market conditions.”

She added that comparisons with other jurisdictions were common, but they all operated under different regulatory regimes, which offered a variety of advantages.

The spokeswoman said, “The Cayman Islands’ framework is designed to offer flexibility and foster innovation, particularly in life reinsurance, while still ensuring compliance with global standards.

“This flexibility often leads to more efficient risk management solutions, without compromising the strength or reliability of regulatory oversight.”

Companies that operate in Cayman are also under “enhanced supervision” and required to have sufficient capital to support liabilities.

The CIMA spokeswoman said that Cayman had signed a string of agreements with regional and international regulators, including in the US, to ensure “seamless information sharing and collaboration on cross-border transactions and consolidated supervision”.

She explained that reinsurance deals involving the US were usually struck on an “asset-withheld basis” – which meant the resources to back the Cayman reinsurance reserves remained in the US, which gave an extra layer of security.

The spokeswoman said guidelines designed to “maintain a strong risk management framework” in normal conditions and tough times had also been issued.

“The Cayman Islands remains a respected global financial centre, not just for life reinsurance but also for the wider financial services industry,” she said. “Its ability to foster innovation and offer tailored solutions to reinsurers is a key reason it continues to attract global business.”

But she added, “We welcome continued dialogue on these issues and remain open to working with regulators and industry participants to maintain a fair, transparent, and competitive global reinsurance market.”

Steve McIntosh, CEO of Cayman Finance, highlighted that companies based in the country had to be audited.

“All Cayman licensed reinsurance companies are required to have an audit and auditors must sign off on the insurer’s solvency and capital adequacy,” he said.

“Most, if not all, such audits will be conducted by globally renowned accounting firms regulated by international auditing standards.

“It would be completely absurd for anyone to believe that big four and other global accounting firms would put their reputations on the line every year to sign off accounts for inadequately capitalized reinsurance companies.”

The Compass earlier this month reported that sources had said Bermuda had launched a lobbying campaign in a bid to hinder Cayman’s bid to gain NAIC “qualified jurisdiction” status in the insurance business, which Bermuda already has.