The private credit and hedge fund managers who built their Cayman structures over the past three decades are increasingly looking at the Islands through a different lens: not just as a fund domicile, but as a platform for asset-intensive reinsurance. According to senior figures speaking at a panel discussion in Chicago on 10 June, that connection is far from coincidental.
For many private credit and hedge fund managers already operating in Cayman through fund structures, the move into reinsurance is more familiar than it would be in a jurisdiction where they do not already have relationships, advisers and operational infrastructure, said David Alison, Managing Director in KPMG’s actuarial practice in Chicago.
The infrastructure that three decades of fund industry strength created – experienced specialist lawyers, auditors, administrators, independent directors, insurance managers, actuaries and a sophisticated regulator – is proving equally valuable to a new generation of insurance structures. With more than 30,000 funds already established in the jurisdiction, the relationships, governance culture and operational know-how are already in place.
The search for durable capital
For investment managers, the attraction of insurance is as much about capital structure as it is about jurisdiction. Gary Harris, who leads Walkers’ Insurance & Reinsurance practice in Cayman, described the fundamental shift in how the industry thinks about long-duration capital deployment.
“Traditional fund structures involve raising capital, deploying it and returning it within a defined fund life,” he said. “A reinsurer is different: where the liabilities are long-dated and properly matched, the balance sheet can support more durable capital deployment.”
That durability is particularly compelling for managers running long-duration strategies. Insurance liabilities, such as annuities, life policies and long-term care products, can be matched with assets that generate predictable cash flows over a longer horizon. For private credit managers seeking to align asset duration with insurance liabilities, the fit can be highly attractive when supported by proper asset-liability management.
Noting the alignment between the two industries, Alison said private credit managers are investing heavily in the annuity and life insurance markets because private credit assets can, where properly structured, help match long-duration insurance liabilities.
How Cayman entered the insurance market
Cayman’s emergence as a serious insurance jurisdiction reflects a broader market shift: asset managers and insurers are increasingly looking for platforms that combine capital-markets familiarity, sophisticated service providers and proportionate insurance supervision. Cayman, already well-known to the investment management community, was therefore a natural jurisdiction for market participants to consider.
Harris explained that Cayman’s insurance sector has evolved from a primarily captive-focused base into a market increasingly capable of supporting complex life, annuity and asset-intensive reinsurance structures. That transition has required a different level of governance, actuarial discipline, asset-liability management and regulatory transparency than traditional captive business, but it has been helped by the depth of expertise already on the island.
For new entrants, Cayman can provide a controlled pathway into the insurance market, depending on the licence class, business plan and substance required. The attraction is not simply cost or speed, but the ability to build within an existing ecosystem of insurance managers, fiduciary professionals, auditors, actuaries, lawyers and independent directors.
The Segregated Portfolio Company (SPC) structure, already widely used in the fund industry, has become an important tool in the insurance context too. Both Harris and Alison noted that clients are using SPCs to support statutory segregation of assets and liabilities across different blocks of business, jurisdictions or investment strategies within a single statutory platform, provided the documentation, recourse provisions and governance arrangements clearly identify the relevant portfolio and preserve the intended ring-fencing.
Familiarity with US counterparties
A further and distinctly practical advantage is the ability to frame capital and reporting analysis in ways that are familiar to US counterparties. For managers whose clients and counterparties are primarily American, regulatory explainability matters.
“We see a lot of structures built on US RBC because US regulators and counterparties already know how to read it, and because it lets you test the assets against the capital in a familiar, disciplined way,” said Harris.
This point also matters because many US-facing Cayman reinsurance structures are written on a funds-withheld basis, meaning the relevant portfolio remains with the US cedant rather than being placed solely in the hands of the offshore reinsurer.
“That is not arbitrage; it is dual oversight,” Harris said. “The assets remain visible to the US cedant and its home-state regulator, while CIMA also supervises the Cayman reinsurer.”
Alison added that Cayman’s risk-proportionate approach to reserving offered a further advantage over jurisdictions with more prescriptive frameworks.
“The risk-proportionate reserving approach and capital approach in Cayman allows for more opportunity to reflect the true economics behind the assets and liabilities,” he said. Panellists noted that the value of that approach lies in applying proportionate supervision to the actual risk profile of a structure, supported by actuarial analysis, governance controls and regulatory transparency, rather than treating flexibility as a substitute for discipline.
Governance: the thread connecting both industries
The governance culture that institutional investors have come to expect from Cayman fund structures is also proving directly transferable to the insurance sector. Data cited at the event showed that approximately 85% of newly launched Cayman funds now include independent directors on their boards, which reflects investor expectations rather than merely regulatory requirements.
Harris argued that governance would ultimately determine which Cayman insurance entities are credible and durable, regardless of how the capital framework evolves.
“Governance will separate credible Cayman platforms from thin structures,” he said. “Regulators are asking practical questions: where has the risk gone, who controls the assets, and does the board and c-suite have the expertise to challenge the structure?”
The talent base to support that governance is expanding in the Cayman Islands. Panellists noted that the actuarial, fiduciary and insurance-management community on the island has grown significantly in recent years and continues to rise.
The qualified jurisdiction status question
A near- to mid-term opportunity, both Alison and Harris agreed, is achieving Qualified Jurisdiction recognition from US regulators. If achieved, that status would help qualifying Cayman reinsurers seek certified reinsurer status in the United States and potentially, for some property and casualty business lines, post reduced collateral for credit for reinsurance purposes. It is distinct from reciprocal jurisdiction status, which is a separate step and can eliminate collateral altogether for qualifying reinsurers.
There is a segment of the US insurance market that probably would not consider a jurisdiction that does not have qualified jurisdiction status, said Alison. Obtaining that recognition would therefore remove an important gating issue for part of the market.
Harris was careful about how the benefit should be understood, particularly for life business. “On the asset-intensive life side this is not really a collateral story,” he said. “Much of that business is already fully funded, and the collateral that does exist is driven by commercial and rating-agency requirements that qualified jurisdiction status does not change. The real value is recognition. It is a stamp of approval that Cayman is a legitimate, well-supervised jurisdiction, and that is what opens the part of the US market that will only engage with a recognised home, across both life and property lines.”
For Harris, qualified jurisdiction status would widen that opportunity, opening US-facing business across both life and property lines, and Cayman’s task is to meet it with the discipline that built its funds industry.
“Cayman’s funds industry was not built overnight. It was built over decades through expertise, consistency, governance and top-quality service to global capital,” he said. “The opportunity now is to develop the third-party life and P&C reinsurance markets in the same prudent and methodical way, with structures that are sophisticated, prudently governed, transparent to its stakeholders, and well supervised.”
The event, hosted by KPMG Chicago and organised by Cayman Finance, was attended by a delegation from the Cayman Islands Government, led by Premier Andre Ebanks, Minister for Financial Services and Commerce.
Gary Harris is a partner in Walkers’ Insurance Group based in the Cayman Islands.
