Meeting the challenge
Welcome to the 2009 issue of Cayman Captive.
Not surprisingly, the underlying theme of many of this issue’s articles is the global economic crisis and what this will mean for the Cayman Islands captive industry in the coming year.
In ‘Cayman captive managers speak frankly’, we ask our panel if a downturn in the captive sector is a possibility or a probability. The consensus is that it is too soon to know, but our experts offer helpful guidance for preparing for unpredictable eventualities.
One thing is clear—as a result of the volatility in the equity and fixed income markets, many captives have seen their capital reserves/surpluses devalued. Several articles address this issue directly. Gareth Pulman of Butterfield unravels the process that led to the economic crisis, analyses efforts to correct the situation, and advises captives to approach investment with a long-term horizon.
Peter Jones of CMI advises captives—in particular, healthcare captives—on how to restore the surpluses they have enjoyed during the past few excellent years, and how to determine the right amount of surplus to weather ‘the best of times and the worst of times’.
Robert Quinn of Wells Fargo looks at investment trusts as an alternative to LOLOCs, whose rates have recently roughly doubled, and offers a solution for where to invest insurance trusts.
Ron Sulisz, director of Insurance Managers Association of Cayman (IMAC) outlines the main challenges facing Cayman captives, the majority of whose ‘parents’ are USUS companies, and how IMAC, together with the Cayman Islands Monetary Authority (CIMA) and the Cayman Islands Government, is working to assist the Cayman financial sector in implementing any changes in strategic focus.
In these uncertain times, Mike Gibbs of Kensington explains how you can ‘control your insurance destiny’ via a group captive, and Larry Yumkas and Sean Logan of ACG illustrate the strategic benefits of running off a captive and how best to manage this process.
Meanwhile, for those readers seeking to set up new captives as financial alternatives in the wider economic climate, Alan Morris of KPMG Cayman Islands and United Insurance’s Kieran O’Mahony provide guidance on establishing and running your new venture.
Whatever the consequences of the economic crisis, both Ron Sulisz of IMAC and Michael R. Mead of Crusader argue that Cayman has a strong financial services sector and a captive industry that is well prepared to meet any challenges and to continue to be one of the major captive domiciles in the world.
