He spoke before a Ritz ballroom packed with captive owners, vendors, lawyers, brokers, and the rest of the 850 or so attendees at the Cayman Captive Forum. And the domicile looks to still be battling the "bullies" and the "Goliaths" of the industry
MacLean was quick to point out that the aforementioned attendance totals for the Forum are an accomplishment for a jurisdiction of its size. A flight from the Boston to Washington, D.C., corridor to Cayman's capital of George Town, however, is a matter of only a few hours, with a possible layover in Miami. That's not too far a trip to ask of captive managers, owners and vendors. And though not all attendees traveled from the East Coast, as many as 90 percent of all Cayman captive owners are from North America, according to MacLean.
They come to Cayman-the locals prefer this name to "Cayman Islands" or "the Caymans"--not just for the white tranquil beaches and the teeming bathtub of an ocean. IMAC sponsored a first-ever survey of captive owners, unveiled at the 2007 Forum, and the survey provided some explanations for why this domicile has been successful.
One reason could be that Cayman is not suffering from the exodus of captives moving offshore back onshore, as other offshore domiciles reportedly are experiencing. Kevin Poole of Prospect Heights, Ill.-based HSBC Financial Services, who helped put the survey together, suggested the island isn't seeing many captives depart for the United States.
Instead, the survey shows, Cayman enjoys the fact that it's a "really young industry." A majority of its captives are less than five years old. According to the survey, 18.3 percent of captives are just one to three years old; 34.3 percent are three to five years old.
It is young and growing, with steady increases seen in the limits, attachment points and coverages that Cayman captives are dealing with.
Cayman is still haunted by the so-called "Grisham effect," its negative image as a haven for tax evasion and money laundering that is the result of far more than the role the island plays in author John Grisham's novel (and later movie) "The Firm."
CEO Bryan Murphy of Island Heritage, a Cayman-based property insurer, lamented that this image is still a "legacy issue" and big impediment to the island's status as a financial services center.
Still, captive owners do not seem to be tripped up by memories of Tom Cruise's foray onto the beach dunes. Instead, they appear to be attracted by Cayman's current tighter but fair regulatory environment. As many as 26.4 percent of survey respondents said regulations are the reason they're in the domicile.
"What you want to know about is the consistency of regulation," said Julie Robertson, a partner at Detroit-based Honigman Miller Schwartz and Cohn and another organizer of the survey.
On the other hand, 55.7 percent of respondents cited stateside regulatory activity as their biggest concern, with another 33.5 percent citing tax compliance. These answers highlight the threat of inconsistent regulations onshore and suggest another reason why captive traffic could be headed south of Key West.
And regulation does not necessarily deal with captive tax and formation issues. Expatriots can face laws that help or hinder their existence in a foreign land, and make it difficult for captive management firms, insurers and other companies from bringing in and retaining the right talent. Cayman does not appear to suffer from inhibitive legislation there either.
"I feel like I am actually part of the community here," said Len Goldberg, CEO and director of Grand Cayman-based Greenlight Re. Goldberg talked to Risk and Insurance on the nation's acceptance of expatriots while attending a forum session.
The Cayman Captive Forum was held on Grand Cayman from November 27 to 29. The 2007 benchmarking survey captured 176 responses, which represents just under a quarter of the total number of captives. The survey is planned to occur annually going forward.
(This article is a Web extra for the first installment of the Bermuda in-depth series. Look for the rest of the installment this coming Wednesday, Jan. 16.)
MATTHEW BRODSKY is a Web editor/senior editor with Risk & Insurance®.
January 1, 2008
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