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Welcome to the Winter edition of our Conyers Coverage newsletter. As always, we are pleased to bring you a jam-packed edition with timely legal and regulatory insights and details on industry developments from the Cayman Islands.
As I'm sure most of you are, our team at Conyers is currently at the crescendo of the annual year-end flurry – and what a year it has been!We've seen phenomenal growth across all facets of the market locally and we've advised on a series of "firsts" as the Cayman (re)insurance industry continues to evolve and markedly mature. More on that in the next edition when the dust finally settles on 2025.
Enjoy the edition – we hope it offers you some valuable perspectives and practical guidance and, as always, our team is available should you need assistance navigating the evolving insurance and reinsurance landscape in the Cayman Islands.
AM Best Finalises Updates to Its Cell Company Rating Criteria: What Changed and What It Means for SPCs
In our summer briefing we discussed global credit ratings agency AM Best's proposal to overhaul how it rates cell company structures, including segregated portfolio companies (SPCs) (see here for our previous article on the proposals). The proposals signalled a move away from a single "protected cell company" label for all cell companies and SPCs in favour of more granular classifications and the potential for direct ratings for incorporated cells. AM Best has now published its final updated criteria, which we consider here.
Calling all Independent Non-Executive Directors (INEDs) - the Cayman Islands Needs You!
The old saying that "Independent Directors are like parsley on a fish: technically there but largely decorative" is now very much defunct in the context of the Cayman Islands (re)insurance industry. So only the courageous need apply....
Despite Cayman Islands law not prescribing the appointment of Independent Non-Executive Directors (IINEDs) for any Class of licensed insurer, for domestic and commercial carriers such a requirement has now become boilerplate in licensing conditions prescribed by the Cayman Islands Monetary Authority's (CIMA). Even where not prescribed, CIMA's Rule on Corporate Governance for Regulated Entities has strongly increased the focus on independent oversight and robust governance, which often manifests in the appointment of INEDs in practice.
On the one hand this policy development can be viewed as a natural evolution of corporate governance standards in Cayman's growing and more sophisticated (re)insurance industry, while on the other it raises concerns as to expense and proportionality, in particular for less sophisticated and lower-risk insurers and indeed affiliated reinsurers.
Insurance Structures for SPC Third-Party Business: Cell vs. Portfolio Insurance Company
Are you or your client considering writing third party (re)insurance business within a Cayman Segregated Portfolio Company insurer (SPC) and currently debating whether a segregated portfolio ("Cell") or a Portfolio Insurance Company (PIC) is the more suitable structure? In the table below we set out some of the key considerations to think about in deciding which might work best. Overall, both a Cell and a PIC achieve statutory ring-fencing of assets and liabilities, but they differ materially in legal personality, governance, regulatory capital, exit options and set-up logistics. For some third-party business a Cell may be more suitable whereas in other circumstances a PIC may be the better choice. Of course, a mix of both Cells and PICs within a single SPC is always possible.
An Introduction to Reinsurance Financing
This first of a series of pieces on (re)insurance financing breaks down the key components involved in financing transactions for Cayman Islands reinsurance companies.
The Purpose, Benefits and Forms of Reinsurance Financing
Financing transactions are integral commercial solutions for reinsurers and their affiliated insurer groups, offering much more than just additional capital. By entering into these arrangements reinsurers gain access to enhanced liquidity management, supporting subsidiary reinsurers regardless of their jurisdiction. These facilities supplement the capital already provided by investors, ensuring that the group can respond flexibly to changing market conditions.
Notable Transactions
Third Point LLC
Third Point Investors Ltd, a London Stock Exchange (LSE) listed closed-ended collective investment fund ("TPIL"), completed the acquisition of Third Point LLC's Cayman Islands based Class B(iii) annuity reinsurer Malibu Life Reinsurance SPC through a reverse takeover process.
Third Point LLC is a New-York-based private equity firm. TPIL entered a sale and purchase agreement in a move to address 'structural headwinds' facing the investment trust sector. TPIL is a feeder fund which invests in the flagship Third Point Offshore Fund managed by Third Point LLC.
The deal was a significant undertaking for all parties involving: (i) the migration of TPIL from the Island of Guernsey to the Cayman Islands; (ii) the approval by the requisite majority of TPIL shareholders at an extraordinary general meeting of TPIL, constituting a reverse takeover under the UK Listing Rules; (iii) the admission of an enlarged share capital of TPIL to trading on the LSE; and (iv) a change of control regulatory application to the Cayman islands Monetary Authority.
The deal was described by TPIL Chairman Dimitri Goulandris as "an important and exciting milestone as TPIL completes the acquisition of Malibu Life, to create a fully capitalised reinsurance operating company. The Board is delighted to bring the company to the London market, where Malibu offers investors a unique and attractive opportunity to access the US$1 trillion and growing fixed annuity market in the United States, through an established reinsurance platform with an experienced and capable management team".
Crestline Investors, Inc.
Rithm Capital Corp. ("Rithm"), a global alternative asset manager listed on the New York Stock Exchange (NYSE), recently entered into a definitive agreement to acquire Crestline Management, L.P., an alternative investment manager with approximately US$17 billion in assets under management, including certain elements of Crestlines insurance business. The deal involved the proposed sale of Crestline's insurance subsidiary CL Re SPC, a Cayman Islands based Class B(iii) reinsurer.
The transaction is expected to close in the fourth quarter of 2025, subject to customary regulatory approvals and closing conditions including the receipt of Cayman Islands insurance regulatory approvals that Conyers will assist in obtaining.
Doug Bratton, Founding Partner and Chief Executive Officer of Crestline noted, "We are excited to be joining Rithm, an industry-leading alternative asset manager with deep expertise in asset-based strategies and a shared focus on building innovative solutions that deliver alpha to investors."
Axonic Capital
Conyers were pleased to assist Axonic on its US$210 million Preferred Equity Investment from LuminArx and Deutsche Bank.
The investment from LuminArx and Deutsche Bank will support Axonic Insurance's continued growth across retail and institutional distribution channels while also enabling it to further accelerate technology development and enhance product servicing capabilities.
Longtail Re
Conyers were pleased to assist Longtail on its adverse development reinsurance US$1.2 billion deal with Everest.
The adverse development reinsurance agreement came into force from 1 October 2025 and was supported by reinsurer Longtail Re, which is an affiliate of Stone Ridge Holdings Group.
The Bank of Nova Scotia
Last but not least we want to wish a very warm Cayman welcome to Scotia Insurance (Cayman) Limited and Scotia Reinsurance (Cayman) Limited, two new Class D reinsurers who joined the growing community of reinsurers in Cayman last month. It is great to have you here, welcome.
Cayman Islands Reinsurance Roundtable Gathers Global Leaders in New York
Conyers Partner Derek Stenson and Senior Associate Frank Farrellwere delighted to attend the second annual Cayman International Reinsurance Companies Association (CIRCA) Reinsurance Roundtable Breakfast at the Harvard Club of New York City, on Wednesday 1 October. The Roundtable Breakfast was organized in partnership with Cayman Finance and the Insurance Managers Association of Cayman (IMAC), with Conyers once again proud to be a gold sponsor of the event.
The event drew 200 delegates from seven countries and highlighted the importance of Cayman's growing role in the global reinsurance market and provided a platform for discussions on US regulatory engagement, global market trends, and innovation opportunities.
The keynote address delivered by Premier André Ebanks reaffirmed the Cayman Islands Government's commitment to achieving National Association of Insurance Commissioners (NAIC) Qualified Jurisdiction Status for Cayman and strengthening cross-border supervisory cooperation with US State regulators.
Premier Ebanks noted "The pursuit of Qualified Jurisdiction Status is a national effort" that "requires alignment across government, regulator and industry. By working together, we can demonstrate that Cayman meets the highest international standards."
Cindy Scotland, chief executive officer of the Cayman Islands Monetary Authority (CIMA), delivered a regulatory update that outlined global trends influencing Cayman's reinsurance sector, including climate change, digitalisation, cyber security and ESG.
The programme included a US-Cayman Regulatory Panel featuring Director Elizabeth Dwyer of the State of Rhode Island Department of Business Regulation, Director Judi French of the Ohio Department of Insurance, Commissioner Michael Yaworsky from the Florida Office of Insurance Regulation, the head of CIMA's Insurance Supervision Division Kara Ebanks, and moderator Bridget Dunn, the Head of Government Affairs at Talcott Financial Group.
Another panel busted myths about Cayman's reinsurance sector and included Joseph Evangelista, General Counsel at Knighthead Insurance Group, Mayer Brown Corporate Insurance and Regulatory Partner Vikram Sidhu, Greenlight Re General Counsel David Sigmon, and moderator Lesley Thompson who is Managing Director at Willis Tower Watson.
The Roundtable Breakfast was the highlight of a week of engagement in New York that included meetings with industry colleagues, clients, regulators and government officials. View some of the highlights in this short video clip courtesy of CIRCA.
Regulatory Hot Topics
Cayman Proactively Prepares for 5th Round FATF Mutual Evaluation – the Countdown to 2027
The Cayman Islands were removed from the FATF's increased monitoring "grey list" on 27 October 2023 after satisfying all elements of its action plan, including effective sanctions, beneficial ownership enforcement, and demonstrable money-laundering prosecutions. Subsequent recognition followed, with the UK delisting Cayman as a high risk jurisdiction in December 2023 and the EU removing Cayman from its AML list effective 7 February 2024. Cayman has since participated in FATF proceedings under the Regional Bodies Guest Initiative and is preparing for the FATF's 5th round mutual evaluation, expected to commence regionally ahead of an onsite review which will commence in 2027. The National Risk Assessment (NRA) process is already underway, and industry members and licensees may be asked to participate in that process.
The upcoming 5th Round Mutual Evaluation represents a critical opportunity for the Cayman Islands to demonstrate the effectiveness of its AML/CTF framework and its commitment to global best practices. This evaluation will scrutinise both the technical compliance of the jurisdiction's laws and regulations, as well as the practical effectiveness of their implementation.
In preparation for the evaluation, Cayman Islands stakeholders — including government agencies, financial institutions, and professional service providers — are expected to review and, where necessary, enhance their internal policies, procedures, and controls. This process involves ensuring that customer due diligence, record-keeping, and reporting obligations are robust and in line with FATF recommendations. Additionally, there is an emphasis on ongoing training and awareness to ensure that all relevant personnel are equipped to identify and mitigate potential risks.
The 5th Round Mutual Evaluation is not only a regulatory exercise but also an opportunity for the Cayman Islands to reinforce its reputation as a well-regulated and transparent international financial centre. Proactive engagement and thorough preparation will be essential to achieving a positive outcome, which in turn will support continued access to global financial markets and bolster investor confidence. Further detail is included in CIMA's latest announcement.
Increased Regulatory Enforcement
Conyers is seeing a marked increase in regulatory investigation and enforcement across various regulatory regimes:
- CRS: The Department for International Tax Cooperation (DITC) have been sending CRS Breach Notices to Financial Institutions that have failed to register as a Financial Institution, failed to submit their annual reporting of their reportable accounts, and/or failed to submit their annual CRS Compliance Form. These Breach Notices set out the required remediation actions and set a deadline for the Financial Institution to make 'representations' to the DITC if the entity wishes to explain the reason for the breach and seek a possible waiver or reduction of the penalty. If no representations are received by the deadline, and if remediation has not been completed, the Financial Institution will receive a CRS Penalty Notice. These have typically ranged from CI$10,000 per breached requirement, and in situations of multiple breaches have been up to the value of CI$57,000. CRS inspections, including in relation to entities classified as Specified Insurance Companies, are also underway.
- Economic Substance: The DITC have been sending Compliance Notices (which identify a perceived breach) followed by Penalty Notices to entities which have failed to file a required Economic Substance Return or Tax Resident Overseas Form by the due date. These notices include a deadline for the required remediation to be completed, and explain that if this date is not met, the entity will be deemed to have not satisfied the Economic Substance Test and will receive an additional penalty notice for that breach. We have also seen entities receiving penalty notices for a failure to satisfy the Economic Substance Test. These penalties can range from a maximum of CI$10,000 for initial failures, and increase to a maximum of CI$100,000 (and the potential to be struck off) for a failure to satisfy the test in relation to reporting period which commences after the entity had already received an initial failure penalty.
- Administrative Fines: CIMA continues to exercise its powers under the Admin Fines Regime to levy fines against financial service providers for breaches of regulatory laws. CIMA issued two new administrative fines in September 2025 (including against a licensed insurance agent) in relation to breaches under the Anti-Money Laundering Regulations, the Rule on InternalControlsand in one case, under the Securities Investment Business Act. These breaches were identified in onsite inspections. The fine amounts were CI$85,043.84 and CI$230,038.72.
Actuarial Valuations
In September 2025, CIMA issued a consultation paper proposing amendments to the Rule and Statement of Guidance on Actuarial Valuations.
The key features of the proposed updates to the rule include:
- sensitivity testing;
- introduction of an uncertainty margin to be attached to reserves;
- additional requirements regarding the structure and specifics of actuarial appraisals;
- a new requirement for the external peer review actuary to perform an independent valuation; and
- introduction of an economic framework that would take a total balance sheet approach, considering both assets and liabilities.
The consultation is in the early stages and any feedback on the consultation is required to be provided to CIMA by 13 February 2026.
Reminder onUpdates to AML Manuals
Finally, as we are approaching Board meeting season, when licensees are reviewing and readopting their policies and procedures, AML Manuals will need to be updated to reflect the new DAML Consent Regime which was covered in the previous edition of Conyers Coverage.
For the latest Cayman Islands regulatory updates from our team, please refer to the most recent Regulatory & Risk Advisory Outlook, available here.
Meet the Team
Lucy Day is an Associate in the Cayman Islands Corporate practice.
Lucy's practice encompasses a broad range of corporate, regulatory and commercial matters involving Cayman Islands companies with particular emphasis advising international insurance institutions, captive insurers and commercial (re)insurers, on all aspects of Cayman Islands insurance and reinsurance law and regulation.
In addition to her corporate and commercial work Lucy has extensive experience advising on private equity and hedge fund matters including fund formations and registrations, fund financing, fund restructuring, mergers and acquisitions, joint ventures and general corporate transactions as well as Cayman Islands regulatory compliance matters.
Prior to joining Conyers, Lucy was an Associate in the investment funds practice of another leading Cayman Islands firm.
To read more and connect with Lucy click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
