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Financing Transactions for Cayman Regulated Insurers

As a leading jurisdiction for the domicile of captive insurance companies and, more recently, reinsurance companies (together “insurance vehicles”), the laws of the Cayman Islands have a central role and require careful consideration when such insurance vehicles seek to approve and execute the various commercial arrangements which they require.

One commonly seen transaction is the establishment of a credit facility or letter of credit arrangement between the insurance vehicle and a financial institution or lender (either based in the Cayman Islands or in North America) (a “Financing Arrangement”). Such Financing Arrangements assist insurance vehicles in a variety of ways and smooth issues that may otherwise cause wrinkles in their cross-border business models.

What Transaction Documents Are Standard?

The core transaction document in a Financing Arrangement is a credit agreement (entered into between the lender and the insurance vehicle) which will specify what additional documents the lender will require and in particular what security the lender will require to make the Financing Arrangement available. For the most part, the core transaction documents will be:

  1. The credit agreement;
  2. A charge over the bank account of the insurance vehicle in the Cayman Islands (or US where applicable); and
  3. Any application forms required by the lender to apply for the Financing Arrangement.

On occasion the lender will also require security over shares of subsidiary companies of the insurance vehicle or guarantees of certain individuals/entities to give further comfort to the lender in extending credit.

 

To continue reading full articles in PDF format:
Financing Transactions for Cayman Regulated Insurers

 


Michael O’Connor
Partner

Cayman Islands   +1 345 814 7395


Kiah Estwick
Associate

Cayman Islands   +1 345 814 7785


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