The Cayman Islands is steering a financial services path divergent from Bermuda’s, having rejected the global minimum tax and maintained an opposition to Europe’s Solvency II.

Cayman Finance, the promoter of the islands financial services sector, laid out the case in marketing material by its content creator Michael Klein, as an explanation to the growth in its reinsurance community.

It said that with the 2016 introduction of Solvency II, non-EU insurance centres had to decide whether to implement equivalent capital requirements to be able to offer insurance services in Europe.

It said: “Reinsurance domiciles like Bermuda, which has a significant European share of business, opted for Solvency II equivalency.

“This created additional costs for US-focused and other non-European global reinsurance programmes in terms of higher regulatory capital ratios, investment restrictions and operating costs.

“Cayman’s financial services sector is predominantly US-facing and 90 per cent of all insured risks are North America based.

“Correspondingly, Cayman elected not to pursue Solvency II equivalency, offering prospective reinsurers a flexible and less prescriptive legislative and regulatory regime.

This allows reinsurers to adopt bespoke capital models that are more proportionate to their specific business, while still meeting minimum capital requirements.”

It also argued that more ”certainty” in its tax regime is an important factor driving its reinsurance growth: “In terms of the global minimum corporation tax, the Cayman Islands government has made clear that it does not intend to levy a 15 per cent qualified domestic minimum top-up tax and will remain completely tax neutral.

“Cayman will comply with the minimum tax by co-operating and exchanging tax information with international tax authorities.”

Cayman maintains a sizeable healthcare captive portfolio, but it has seen its growth more recently from reinsurance entities and the Class B(iii) license category, attracting a growing number of life and annuity businesses.

There are 27, primarily writing life, making up 4 per cent of all international insurance licensees, with $33.1 billion of premiums and $64 billion of assets.

Cayman said its reinsurance sector has posted double-digit annual growth rates in the past six years and dozens of reinsurers have been licensed by the Cayman Islands Monetary Authority, including eight Class D companies with a physical presence.

The number of Class B(iii) captive insurers and reinsurers that are predominantly third party writers is up to 183, an increase of 40 since 2019.

CIMA last reported 80 Cayman registered reinsurance vehicles and a sector accounting for $42.7 billion in premiums and $81.4 billion in assets.

It said it made up 11 per cent of all insurance entities, 74.2 per cent of premiums and 59.4 per cent of total international insurance industry assets.

Cayman Finance said: “Although, there are fewer Class D reinsurers, they have an outsized impact on the economy, given that they rent office space, employ staff locally and pay a licence fee that is ten times larger than that of their Class B(iii) captive reinsurance counterparts.

“Nevertheless, captive reinsurance is a significant business for local insurance managers, who provide accounting, administrative and other management services.”