The Cayman International Reinsurance Companies Association has published its official response to a 6 Oct. The Wall Street Journal article that framed Cayman’s growing reinsurance business as a potential risk to US insurance policyholders.
The association drafted a response within one day of the publication of the article, ‘Why Insurers Are Taking Your Money to the Cayman Islands‘, but so far, the newspaper has refused to publish the letter.
This led to the association making its response public on 21 Oct.
“The piece misrepresented Cayman’s regulatory framework, and while our response wasn’t published, it’s important that the facts are,” said an association spokesperson.
Capital requirement dispute
One of the article’s central themes is that Cayman reinsurers have lower capital requirements than peers in other jurisdictions.
The article reads: “The companies that manage the money are increasingly storing it offshore, in jurisdictions like the Caymans that don’t require them to hold as much extra capital in case their investments turn sour.”
In its letter, the association refutes that claim. “The Cayman Islands Monetary Authority (CIMA) enforces a rigorous, risk-based capital regime aligned with international standards established by the International Association of Insurance Supervisors. Capital requirements reflect the size, nature and complexity of each reinsurer’s business, ensuring that policyholders remain fully protected.”
In simple terms, CIMA fixes the capital requirements for each reinsurer based on its particular risk profile. In a 22 Oct. interview with the Compass, Steven Papciak, chair of the association’s marketing committee, explained the details. “When Cayman companies are setting up these transactions, they have to demonstrate to CIMA that their proposed capital framework covers all the risks associated with these insurance products. Ultimately, these companies have a burden of proof to show that policyholders are protected.”
The letter, which was signed by Greg Mitchell, the chair of the association’s board of directors, also makes another important point: Because the Cayman Islands does not have Qualified Jurisdictional Status from the National Association of Insurance Commissioners in the US, Cayman reinsurers are already subject to more stringent collateral requirements.
“Cayman reinsurers fully collateralize their life & annuity obligations to US insurers at the US statutory reserve level with assets held in the US and invested as agreed with the ceding insurers,” states the letter.
“I’m still surprised by the claims of a lack of transparency in the Cayman reinsurance industry,” said Papciak. “These transactions are backed by heavy levels of collateral, which only makes them more secure and accessible.”
The article mentions various reinsurance transactions to highlight potential risks. Yet, as the association’s letter points out, “the majority of examples cited in the story relate to transactions in Bermuda, which operates under a separate regulatory regime.”
Regulatory oversight
Another criticism The Wall Street Journal article levels at Cayman is that the jurisdiction is not as well-regulated as places like Bermuda or the US. It cites the example of Apollo Global Management, “a market leader in annuities”, that “shuns places like the Cayman Islands”. It then quotes Apollo’s chief executive, Marc Rowan, as saying “[The insurance sector has] been asleep at the regulatory switch”.
Again, this is refuted by the association. “Cayman’s framework features stringent solvency testing, independent audits and continuous regulatory supervision, complemented by active engagement with US regulators and global rating agencies,” reads the letter.
The association is keen to emphasise that Cayman’s regulators work closely with counterparts in the US. “All transactions involving a Cayman reinsurance company are subject to prior review and approval by both the relevant US regulators and by CIMA, ensuring full transparency and coordination.”
The ultimate level of coordination with the US would be if Cayman achieved qualified jurisdictional status, which was highlighted as a key government aim in the Strategic Policy Statement 2026-2028.
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