CIMA Quarterly Report Shows Healthy Cayman Fund And Insurance Sectors

by Amanda Banks, Tax-News.com, London

11 February 2008

The latest quarterly report from the Cayman Islands Monetary Authority (CIMA) shows that the Cayman Islands remains at the head of the offshore funds world, while maintaining its position as the second-largest offshore insurance domicile. The banking sector also held its own, the Authority revealed.

The Investments and Securities Division (ISD) saw a net increase of 1,288 funds authorized during calendar year 2007, an amount which brought the total number of active funds registered, administered or licensed in the Cayman Islands to 9,413 as at 31st December, 2007. This represents a 16% increase over the 2006 calendar year.

Between January and December 2007, the division processed 1,965 new funds and 677 fund terminations. By comparison, in 2006, 1,889 new funds and 767 terminations were processed. The 1,288 net new funds for 2007 compares to 1,122 in 2006, and 1,200 in 2005.

The statistical update also showed that the Cayman Islands continued to hold its own in 2007 as the second largest offshore domicile for captive insurance companies. The number of Cayman-domiciled captives grew to 765 during calendar year 2007, a net increase of 25 from the 740 captives active as at 31st December 2006.

Health care continued to be the most popular risk insured by these companies, with 36% of licensees (277) having health care as the primary focus. This was followed by compensation for workmen, which was the primary business for 21% of captives (162). The third most popular class of business was property, which was the primary focus for 11% of captives (84).

North America continued to be the predominant location of the risk that Cayman captives cover, with 90% of captives (688) covering risk in that location as at December 2007. Another 3% (26 companies) covered risk in the Caribbean and Latin America.

Assets held by Cayman captives at the end of the calendar year totalled almost USD33 billion, up from USD29.6 billion as at December 2006. Total premiums amounted to USD7.5 billion at 31 December 2007, compared to USD7 billion the previous year.

In the banking and trust sector, the CIMA report showed that as of 31st December 2007, there were: 19 Class A banking licences active; 261 Class B licences; 1 Class B restricted licence; 64 Nominee Trust licences; and 7 Money Services Providers.

In the Fiduciary Services sector, at the end of 2007 there were: 51 Unrestricted Trust licences; 87 Restricted Trusts licences; 21 Nominee Trust licences; 69 Company Trust licences; and 7 Corporate Services licences.

Legislative developments during the quarter under review included an amendment to the Monetary Authority Law (MAL) passed by the Legislative Assembly on 13th December 2007, which clarifies and extends CIMA's powers of disclosure of information to other regulatory authorities in response to requests for assistance from these authorities.

The amendment to section 50 of the law removes the distinction between routine and non-routine requests, and the corresponding referrals to the Attorney General and the Financial Secretary. The clause also enables the Monetary Authority to consent to the use of information provided pursuant to a regulatory request for assistance in certain criminal investigations or proceedings.

Previously, the MAL did not allow CIMA to consent to the use of information it provided to overseas regulators for relevant criminal investigations or prosecutions without the consent of other persons, such as the Attorney General and Financial Secretary.

The decision to amend section 50 of the law arose out of ongoing discussions between CIMA and the International Organization of Securities Commissions (IOSCO) over Cayman's provision for cooperation with international regulators.

The discussions stemmed from CIMA's application for IOSCO membership. The memorandum of objects and reasons notes that the amendment to the MAL implements "the agreed position reached with [IOSCO] in respect of what were perceived to be areas of non-compliance with the Commission's requirements relating to international cooperation".

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