The Cayman Islands Monetary Authority (“CIMA”) published a new Regulatory Policy (“Regulatory Policy”) in May 2019 detailing the regulatory criteria applicable to applications for the granting of Class C insurance company licenses. The Regulatory Policy will be applied by CIMA in addition to the relevant provisions of the Insurance Law, 2010 (the “Law”) and existing regulations applicable to Class C applicants for the granting of Class C licenses.

Class C Licenses

Under Section 4(1) of the Law a Class C insurance licensee is required to ensure that its reinsurance arrangements where the insurance obligations of the insurer are limited in recourse to, and collateralised by, the insurer’s funding sources, or the proceeds of such funding sources including the issuance of bonds or other instruments, contracts for differences and other funding mechanisms approved by CIMA.

The Regulatory Policy accordingly applies to entities providing reinsurance through the issuance of insurance linked securities (“ILSs”) such as catastrophe bonds (“Cat Bonds”), sidecars, collateralised reinsurance, life insurance securitisation, longevity or similar instruments.

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