GEORGE TOWN, GRAND CAYMAN — The Cayman Islands Insurance (Portfolio Insurance Companies) (PIC) Regulations 2015 were passed 16 January 2015, along with related sections of The Insurance (Amendment) Law 2013.

These regulations enhance the insurance statutory framework, providing more alternatives to risk management by enabling insurers incorporated as segregated portfolio companies (SPCs) more flexibility.

Operating within the fundamental and well-known principles of corporate law, based on English Common Law, this legislation is considered more robust than the incorporated cell company (ICC) structures offered in other jurisdictions.

A SPC insurance company will be able to incorporate one of its cells by establishing a PIC under it. Once the PIC is registered with the Cayman Islands Monetary Authority (CIMA), it may write insurance business in its own name, as a separate legal entity – an exempted company limited by shares.

There are several key points that make these new regulations noteworthy: a PIC can contract with other cells and other PICs within the SPC, which facilitates reinsurance, quota sharing and risk pooling; although the PIC is controlled by voting shares by its SPC, participating shares can be issued to those with an economic interest in the PIC; a PIC can have a different board of directors to that of the controlling SPC, providing for greater governance flexibility; the PIC is recognised as a separate legal entity for US tax purposes, including having its own federal tax identification number; a PIC can be wound up without affecting its controlling SPC or other PICs, or a PIC can merge with another captive; and a foreign captive can redomicile to Cayman as a PIC where it may not be of sufficient size to operate as a stand-alone captive.

Chairman of the Insurance Managers Association of Cayman (IMAC) Kieran O’Mahony welcomed the new regulations: “The Cayman Islands have always positioned itself as being a centre of innovation and of creating an environment that carefully considers market needs balanced with good governance. The PIC legislation and accompanying regulations both exemplifies and reinforces Cayman’s leading position over other jurisdictions in terms of sensible and proportionate regulation, innovative legislation (based upon a trustworthy and reliable legal system) and the high level of governance and compliance afforded to it.”

The Cayman Islands is the world’s second largest captive domicile, with approximately 760 companies under CIMA’s supervision.

Insurance Managers Association of Cayman (IMAC) is a non-profit organisation run by the insurance managers of the Cayman Islands. In operation since 1981, IMAC’s aim is to act as both regulatory liaison with the Cayman Islands Government and to promote the Cayman Islands as a domicile of choice for captive insurance companies.

IMAC hosts the world’s largest captive insurance conference, attracting nearly 1,500 captive managers, service providers and directors annually.

For more information on IMAC visit www.caymancaptive.ky.

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