No one familiar with the Cayman Islands would describe the atmosphere there as "frantic." Compared to almost anywhere else, Cayman is a relaxed and laid-back place, where gentility remains the order of the day. In the financial services arena, however, the place is just about on fire.
The 2005 Cayman Captive Forum proved as much. More than 530 delegates were registered, most of whom showed up. That made the Forum the largest offshore financial conference in history.
Cayman has gone from rags to riches in less than a generation. In the 1980s, a solitary Holiday Inn graced Seven Mile Beach, the main vacation attraction. The hotel's dining room offered a choice of fishburger or cheeseburger for dinner, and the fishburger was usually unavailable. The airport was a couple of tin huts. The business community was composed of a lawyer on one floor of a two-story building, with a bank on the other floor.
Today, Cayman has more than 570 banks. They have assets in excess of $600 billion. Cayman recently registered its 10,000th mutual fund, about 70 percent of which remain active. At about the same time, Cayman registered its 700th captive. Premiums in the sector exceed $6 billion a year, and assets approach $30 billion. The chart of captive registrations in Cayman is a straight line heading upward at about 40 degrees.
Now Cayman has registered its first on-the-ground reinsurance company, Greenlight Re, with initial capital of about $220 million. The company intends to write reinsurance for Cayman captives, as well as global reinsurance.
Major law firms in Cayman are merging with others around the globe. Hunter & Hunter merged with Bermuda's Appleby Spurling & Kempe. Maples & Calder merged with Irish corporate finance law firm Binchys.
The Ritz-Carlton has just opened a palatial facility on the now-crowded Seven Mile Beach. The penthouse apartments at the Ritz-Carlton reportedly sold out at prices ranging up to $40 million apiece. Rebuilding has been going on since Hurricane Ivan messed the whole place up in 2004, adding cranes to the Cayman skyline and the buzz of activity to the streets. Traffic is hellacious. All this within little more than 20 years.
Financial services is evermore central to the economic well-being of the Cayman Islanders. Right now, that is nothing but good news.
SMALL ISLAND. BIG EGOS
Financial services is a "green" industry. It requires trained people, which stimulates the process of education, and it needs modern buildings, good roads and decent housing. Politicians have no choice but to focus on productive matters, which is a rare and wonderful thing.
The bad news? Time was when financial standards in Cayman weren't quite up to snuff--indeed, the Islands became a byword for money-laundering--but those days are over. If there is any bad news today, it would be that Cayman does not have very many people. It has therefore been importing foreign workers to support all this economic activity. Cayman has few racial problems (another rare and wonderful thing), but tensions are beginning to be felt as Caymanians wonder whether their culture is being swamped.
It is. The same is happening in Bermuda. When billions of foreign dollars arrive in a land near the U.S.A., that land starts to resemble the more developed corners of the United States. Big incomes make for big changes, big cars, big houses and big egos.
ROGER CROMBIE, a Bermuda-based writer and editor, is a columnist for
Risk & Insurance®.
February 1, 2006
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