Blue Ocean Reinsurance Group and the Cayman Tide…
As the 2025 ReFocus conference in Las Vegas approaches, Blue Ocean leaders Adrian, Graham, and Ruwan share their insights on the recent evolution of the reinsurance industry
Introduction
The Cayman Islands have experienced significant growth as a jurisdiction over the past 5 years. For the last 50 years, it built its reputation on healthcare captives, which have traditional accounted for 40% of its book. However, it has been the B(iii) license classification that has seen the most development over the past few years. This growth has led to a substantial increase in the variety and complexity of business being written under this classification, with ownership structures, sources of capital, and lines of business different and more sophisticated than heretofore. As a result, there is greater demand on the regulatory and service infrastructure to support these clients.
Reinsurance And B(iii)
One of the most notable developments has been the growth of reinsurance business within the B(iii) space. When combined with the Class D Reinsurers, it appears that Cayman by design, has carved out a material diversification opportunity from the traditional alternative risk financing vehicles like captives. Cayman’s 94 licensed reinsurers, backed by $94B in assets, wrote premiums of US$25bn throughout 2024, including US$12bn in life & annuity.
Various economic conditions have contributed to this growth, as indeed have regulatory developments, longevity or extended lifespan, improvements in healthcare and drugs, and rising healthcare costs. These factors have created a need for reinsurance solutions in underfunded areas such as life Insurance, pensions and healthcare. Solvency II, primarily a property and casualty model, has not necessarily adapted quickly enough to support life and annuity businesses, meaning certain capital efficiency models are required as an alternative reinsurance market.
With 90% of Caymans’ business coming from the US market, and 30,000 funds registered in Cayman, it stands to reason that Cayman would align more closely with the US regulatory Model. It should come as no surprise that the main conversation in Cayman over the last few years, has focused on seeking Qualified Jurisdiction status with the NAIC, to enhance its regulatory framework.
As reinsurance business in Cayman grows, it is essential that we examine the traditional offering of the jurisdiction. In much the same way that most all US states have enacted captive legislation, it is not enough to have the legislation in place; the supporting infrastructure for captive and reinsurance companies must be examined closely. Industry service partners such as auditors, lawyers, actuaries, consultants, advisors, regulators and insurance managers have all been looking at their service model to ensure that it evolves with the advanced needs of some of the industry.
Responding To Jurisdictional Needs
Blue Ocean Reinsurance Group emerged from a sense that something was missing across that same service model. Ruwan’s regulatory perspective, allied to Adrian and Graham’s operational experience, meant that those early conversations and comparative views formed the foundations of Blue Ocean Reinsurance Group. The group’s approach can be understood through its key cornerstones :
Advisory: Early Insurance management pioneers were great generalists in advisory areas, having line of sight on all aspects of structuring, actuarial, underwriting, capital advisory (unsophisticated as it was back then), brokerage, reinsurance, retro, M&A or transactional due diligence, financing, aggregation and balance sheet protection. At Blue Ocean, we work with clients on all aspects of developing their business plans, with particular emphasis on structuring (in conjunction with legal and tax advisors). Due to the historical sensitivity around asset-intensive reinsurance, we work very closely on investment portfolio composition, to meet the needs of CIMA and the desired outcomes of the reinsurance clients, many of whom are owned by asset managers and private equity firms.
Blue Ocean focuses on five distinct workstreams during the pre-formation process:
Investment Guidelines and Capital: Blue Ocean will assist its clients to present its investment guidelines to CIMA in a manner that fairly describes the client's approach to underwriting and managing asset-related risks. We recognise that each client’s approach to managing investment risks and will have a direct impact on its capital requirements.
ProFormas: Blue Ocean coordinates with clients and trusted advisors to recommend an accounting basis for preparing pro formas that consider the client’s economics and reporting.
Staffing Requirements: Staffing requirements are considered in the broadest sense, including employees, shared services, and trusted advisors.
Business Plan: We assist with constructing the business plan for the application process.
Due Diligence: Blue Ocean help clients prepare for CIMA’s due diligence on investors, ownership structure , directors, and management.
Each client is unique in their abilities, business type, expectations, and approach to company management. We tailor our service levels to match the needs of each client, providing the best advice and helping them navigate through issues.
Client Differences: Clients vary in their current abilities, the type of business they intend to write, their expectations, and how they intend to run their company. Blue Ocean adjusts its services to match these needs.
Service Adjustment: During the pre-formation stage, Blue Ocean carefully adjusts its service levels and focus to match each client's starting point and needs, ensuring it provides the best advice.
Blind Spots: If we believe a client has a blind spot or does not fully understand the impact of their approach, we will proactively inform the client and help them navigate through those issues, ensuring they are well-prepared and informed throughout the process.
Becoming A Trusted Advisor: Blue Ocean aims to become a trusted advisor for each client, starting during the pre-formation stage and continuing through the operational phase.
Examples Of Client Engagements
Example 1: Established Reinsurer
Established reinsurer in another offshore jurisdiction looking to set up in the Cayman Islands. The company aims to replicate its successful operating model in the Cayman Islands, offering a different risk profile and price points to its prospective clients. Blue Ocean will assist with investment guidelines, pro formas, capital requirements, and the application process, including KYC due diligence.
Company Intent: The established reinsurer intends to replicate its policies, procedures, and capabilities in the Cayman Islands, offering a different risk profile and price points for its services.
Investment Guidelines: For this company, investment guidelines are a primary focus, as they are a key differentiator in promoting themselves. They trade on yield, with a minimum threshold required before quoting.
Capital Requirements: Blue Ocean assists the company in identifying sources of funds to meet the capital requirements set by CIMA, ensuring compliance with regulatory standards.
Staffing Model: The company relies heavily on shared services and does not initially intend to employ staff in the Cayman Islands. Blue Ocean provides the statutorily required services of an insurance manager and knowledgeable people on the ground who are able to provide elevated advisory services bridging the knowledge gap between operating in the Cayman Islands and its home office
Application Process: The application process will include KYC due diligence on shareholders and directors. Blue Ocean will assist in describing the ownership structure and preparing the client for potential inquiries by CIMA.
Example 2: Asset Manager:
An asset manager with experience in investment management services for reinsurance companies plans to form its own reinsurance company. Blue Ocean will provide additional resources and support, including managing the company and training staff.
Company Background: The asset manager has experience providing investment management services to reinsurance companies and plans to form its own reinsurance company.
Investment Guidelines: The asset manager has a clear understanding of its asset allocations and will focus on the asset classes where it has expertise. Blue Ocean helps with understanding capital requirements and impact on capital requirements, focusing on accounting and sources of funds.
Staffing: The company has limited resources with insurance or reinsurance expertise within its enterprise and intends to hire staff as the business grows. Blue Ocean will provide additional resources to manage the company to appropriate standards in the short term, enabling the company to hire and train key staff on its own timeline. This approach enables our client to operate on a variable cost structure, ensuring its start-up phase operates efficiently without taking undue operational risk,
Pro Forma The construction of the pro forma is co-developed between the asset manager and Blue Ocean.
Business Plan: The asset manager will have prepared the business plan for internal approvals but will be redrafted into a business plan format suitable for the application process.
Application Process: The application process focuses on understanding the ownership structure and identifying the ultimate beneficial owners. Blue Ocean prepares the client for the KYC process and potential inquiries by CIMA.
Insurance Management
Our client base primarily consists of asset managers and private equity firms, mostly focused on B(iii) licenses, although we also work with some Class D carriers. These clients are primarily interested in the investment returns of their underlying portfolio. Blue Ocean is positioned to support all aspects of setting up and operating reinsurance companies.
Insurance management companies that support reinsurance licensees in Cayman - who themselves are Regulated by CIMA – are perceived by CIMA as an extension of the senior management of the regulated entity. In theory that is sound, but in practice it carries a far more onerous set of wide ranging obligations than before. Coupled with a fines and penalties regime, the role has become much more challenging. Insurance management plays a privileged and central role, providing an influential position with exposure to all relationships surrounding the client.
An experienced insurance manager will take on the role of the ‘ringmaster’, coordinating all parties with a duty of care to the client and being seen as integral to the relationship. Conversely, a weak insurance manager shuffles administratively between parties, reflecting poorly on the industry standards. At Blue Ocean, we are recapturing that traditional trusted advisory role, serving as a hub for all aspects of the reinsurance companies’ day to day operations.
Governance, Risk & Compliance
In the insurance industry, strong Governance, Risk, and Compliance (GRC) frameworks are not just a regulatory necessity, but a critical component of sustainable business operations. Re/insurers operate in a highly regulated environment where compliance failures can lead to severe financial, operational, and reputational consequences. Effective governance ensures that decision-making processes are robust and aligned with regulatory expectations. Risk management helps identify and mitigate potential threats before they materialise, and compliance safeguards the company against legal and regulatory breaches.
The obligations of Boards and Directors have become increasingly complex, taking on added layers of responsibility, liability and transparency. Many Directors, whether Executive or non- Executive, and even with the best intentions, often find it challenging to navigate their obligations effectively. They face a constant influx of voluminous information, evolving regulatory requirements, and heightened scrutiny from regulators, stakeholders, and investors.
Given these complexities, the role of an Insurance Manager from a GRC perspective should be both proactive and preemptive. Rather than merely reacting to regulatory changes or compliance challenges, an Insurance Manager with deep GRC expertise can help Boards and Directors anticipate risks, implement best practices, and create a structured, well-documented approach to compliance. This forward-thinking approach not only minimises regulatory risk but also enhances operational efficiency and strategic decision-making.
An experienced team with local knowledge and a strong background in GRC can add immense value to the clients they manage. Understanding the nuances of the regulatory landscape, cultural expectations, and jurisdiction-specific requirements allows for tailored solutions that go beyond generic compliance checklists. Such a team can provide practical, hands-on support to boards and senior management, offering clear, actionable insights rather than overwhelming them with compliance burdens.
Blue Ocean has a formed Bureau of Directors made up of seasoned insurance and reinsurance executives who have spent their entire careers in reinsurance. Our goal is to increase the supply of qualified Directors and Officers to reinsurance companies operating in the Cayman Islands. These individuals offer the capacity to transfer knowledge through their roles as independent board members or interim officers of the company.
Conclusion
The Cayman Islands have a proud history as a well-established and respected domicile over the past 50 years. To ensure continued success in the next 50 years and beyond, it is imperative that we have an industry replete with commercially experienced and highly skilled business strategists and operators. This must be supported by an immigration platform that allows reinsurers to attract and retain top quality talent.
The insurance management industry, and CIMA as the Regulator, must continue to evolve and upskill to retain commercial relevance. Building out a Regulatory infrastructure capable of withstanding international scrutiny, efficiently reviewing submissions from ever more complex applicants, and absorbing the increased demands of future strategies, such as Qualified Jurisdiction status, is essential.
Economic and political factors always influence offshore growth, and these factors may warrant their own separate discussion. But for now, Cayman is ideally poised for continued success, and Blue Ocean Reinsurance Group are excited to play a role in it.