Roger Crombie: Cayman is on course for a record year for new captive formations. What is fuelling that growth and where is it coming from?
Clive Thursby: It has been an excellent year; we are already well up on 1999 and we are not finished yet. Comparing one year with another can be misleading, however. Last year ended with an unusual level of proposals that were still to be completed, possibly for Y2K reasons. The carry-forward into 2000 gave us a running start to the year, and that momentum has not slackened since. Obviously, a hardening US market (or perhaps more accurately the perception or anticipation of a hardening market) has been a catalyst for rethinking risk financing options. In some respects this has opened up the captive world to a new set of players, who previously may not have thought much about this type of approach.
This has been particularly true in the agency arena, where portfolios of well-established business are now being given the captive treatment. In some cases this has been at the initiative of the agent, seeking to reduce the effects of market volatility by introducing and building his own capacity; in others, insurers have been requiring MGAs to take a share of the risks accepted.
Certain sectors, such as nursing homes and employee leasing firms, have been hard hit by major changes in underwriting policy on the part of insurers. These are, of course, exactly the conditions in which the textbooks tell us captives should thrive. Well, maybe. Lack of primary coverage typically means reinsurance problems as well, and therefore captive solutions may not be easy to implement. Nevertheless, we are seeing growth in these areas.
The repeal of the Glass-Seagal Act allows US banks to get into insurance and they may become a major source of new business. It's too early to say, but eight banks have commenced insurance operations here this year.
Another factor I have detected (and I very much hope it will have greater effect) is a more entrepreneurial spirit amongst the deal-makers. Recent market consolidation caused too much introspection amongst the big firms, who have now started to remember that they have clients as well, and these clients are getting more sensitive about value and are more open to fresh ideas.
Cayman captives remain predominantly US-orientated, but our international appeal is expanding. This year we've seen applications from South America, Europe, Asia and even Australia. Oh yes, and even more satisfyingly, from Bermuda.
Tom Clark: The range of enquiries remains widespread. They continue to come from traditional sources. Within medical malpractice, I would say we have seen more interest from nursing homes and long-term care facilities than we did previously. Interest in agency captives is on the increase, and it is probably true to say that agencies are also fuelling the establishment of segregated portfolio companies (SPCs) and cells in SPCs.
Ian Kilpatrick: I can only speak for myself. My new clients are coming from well-established contacts. Then, too, the inability to obtain insurance within the nursing home industry, as Tom says, has also fuelled enquiries.
Mitch Melfi: It is not surprising to me that Cayman is on course for a record year for new captive formations. Cayman regulators have been very good to work with. They assist in developing risk solutions rather than creating regulatory obstacles. Ease of administration and flexibility make the domicile an attractive place to do business. This willingness on the part of Mr Thursby and his staff to be sound, but flexible, gives captive owners an effective domicile in which to implement creative risk solutions.
Alan Craig: Mitch's comments highlight the fact that clients frequently comment on the benefit to them of the close working relationships among the lawyers, insurance managers and accountants in Cayman and between those service providers and the Monetary Authority. Many have been pleasantly surprised by the responsiveness of all parties involved in the captive formation process in Cayman and I am certain that this positive reaction is in large part behind the increase in business we are seeing.
Tom Jones: The tightening insurance market would be among the favourable factors affecting corporations in the Cayman Islands. Chief financial officers are discovering captives as a financial tool which can enhance earnings per share. Previously, perhaps, the captive had been lost in the risk management department; now it has higher visibility.
Roger Crombie: As the market begins to harden, are captives being put to wider uses? Are they being seen as facilities for more sophisticated risk financing?
Mitch Melfi: I agree with Tom; as the market begins to harden, captives are being put to wider uses. As the hardening market causes costs to increase, captives provide a mechanism to ease the market cycle. In our own situation, we have not only taken on greater risk through higher retained limits, but we have included coverages that have historically been placed in the commercial marketplace. One of the objectives of funding risk through a captive is to maintain predictability and stability over time with respect to risk finance costs. An adequately funded captive permits pricing consistent with experience, rather than being victimised by the hardening markets - markets that may or may not have anything to do with an organisation's actual experience.
Captives can and should be used as facilities for more sophisticated risk financing. Risk managers need to be risk takers. These captive facilities allow for this greater degree of risk-taking by providing a vehicle with which to manage the risk, thereby controlling and/or reducing the cost of risk. Managing these risks should not be underestimated. Without an organisation's commitment to risk management, the captive simply becomes a bank in which dollars can be held until the inevitable claim occurs.
Clive Thursby: Expansion is not just about new formations; existing captives have been restructuring their participation in the covers they write, often increasing their retentions. More interestingly, greater imagination is being applied to making captives work harder, leveraging their capital and surplus, so that they can perform a more useful role for the insured groups they serve. It is perhaps uncommon for a regulator to encourage more risk taking, but we must never overlook the business purpose behind the captive. And there are signs that risk managers are thinking about their captives providing more than the traditional lines of workers' compensation and professional liability, of which we see so much here. Captive usage in the 1990s was largely conservative in design; I think we can now expect more creativity. That will take us beyond the bounds of what has been conventionally insurable. For captives to succeed in overall corporate terms, rather than just helping with the smarter buying of insurance, they will need to contribute to the financing of a much broader portfolio of risks. For example, I would like to see captives more involved in the uncertainties of mergers and acquisitions. These always produce surprises. We have seen some movement by Cayman captives in that direction, and I expect more.
Tom Jones: Yes, but the turning market is a double-edged sword. There is an increased need for captives, but it is more difficult to start one in a hard market.
Tom Clark: Captive insureds have opted for commercial insurance coverage while premiums were so competitive in the soft market, as well as locking into two- and three-year deals. As these arrangements run out, there is a return to captives. This flexibility is a major benefit of having a captive. As to wider uses, a hardening market will definitely progress that. But overall, it is a natural progression for captives to provide the more predictable coverages and build up assets to allow them to participate in less predictable lines and excess layers. The improved focus on risk management that comes from captive participation gives participants the confidence to use the expertise in new areas.
For example, a healthcare system will have built up a sophisticated risk management and feedback network for its professional liability. It will then look at another big line item, such as workers' compensation costs, and say: ‘Can't we apply these skills here too?' Success whets the appetite for further control over operational outlay. Particularly in the current healthcare environment, controlling your costs can make or break an enterprise.
Alan Craig: As Tom mentions, we have seen existing captive owners look to broaden the scope of activities covered by their established captives. In addition, as a result of demand caused by market conditions, we have seen consideration being given by existing market captive owners to introducing additional participants. The focus on the captives has also resulted in increasing sophistication in captive structures.
Roger Crombie: It is now some two years since Cayman introduced its segregated portfolio company (SPC) law. What impact has that had and what do you see as the potential for SPCs?
Alan Craig: We have seen a maturing and the practical development of the SPC concept over the last 12 months. We have seen the use of SPC companies expand beyond ‘rent-a-captive'-type structures and their application to the specific needs of captive insurers, including segregation of different business lines, policy-specific segregation or refinement of group captive structures. A significant number of our ongoing projects involve SPC structures. These projects cover a wide range of business sectors and the structures being used are varied and increasingly sophisticated. SPC structures have been favoured for larger projects to date, but the flexibility that they provide for business expansion should be borne in mind by anyone contemplating the establishment of a captive insurer.
Clive Thursby: Two years is not a long time in which to judge the success of a new idea, but the performance so far has been very encouraging. These things take time to become accepted and for business development activity to bear fruit, but clearly the pace is picking up. Significantly, several facilities have been put in place without any assured clients, and increasingly that confidence is starting to be rewarded.
At the moment, we have 25 SPCs, which I think makes Cayman the world leader on that count. However, with 60 cells here, Guernsey remains ahead in terms of usage. Unlike Guernsey, we have not seen the conversion into SPCs of existing rent-a-captive structures, which still seem to have a market need of their own. My expectation is that the number of cells will more than double in the next 12 months.
Ian Kilpatrick: There has definitely been a substantial number of SPC facilities set up. They are particularly useful in the life arena and I too foresee further growth. I believe the law, while acceptable, has to be refined, particularly when it comes to liquidation provisions.
Tom Jones: Yes, there has been substantial growth, but a degree of caution is in order in the formation and operation of SPCs. For example, under Cayman law directors of SPCs are subject to potential personal liability for failure to segregate the assets and liabilities of each individual cell. The captive manager's development of, and adherence to, strict internal accounting procedures for segregating each cell is critical. Also, the test of whether the cell effectively accomplishes its objective of legal separation in an insolvency proceeding will pivot on, among other factors, the location of the assets in dispute and the forum in which the adjudication takes place. The operative contracts must be carefully drafted in this regard. Take as an example a cell of a Cayman SPC with all its assets in New York, and where the operative contracts specify that New York law will govern interpretation of the contractual relationships and where a New York court will have jurisdiction to resolve disputes. In such a situation, it is likely that the customary insolvency rules of pari passu (i.e. rateable distribution) will cause the New York judge to disregard the separateness of the individual cells. To sum up, from a legal perspective, creating a cell company properly is the beginning point, and administering it properly throughout its life is the ending point.
Tom Clark: The introduction of SPCs has had a great impact, judging by the numbers incorporated and the numbers of cells registered. But the full impact has not been felt yet because the past two years have been a learning curve for all interested parties. SPCs have been well received and understood by many large US ceding insurers, which is important in being able to market the concept when fronting arrangements are required. I see the greatest potential for SPCs as a springboard for stand-alone captives: i.e. that they will be used as a stepping stone for participants to become familiar with the captive concept, more sophisticated risk management and financing and to build up reserves with which to start their own captive. There will always be a market for segregated portfolios among smaller businesses that will not advance to that stage and I believe we will see creativity in building models that cater for risk sharing among small blocks of business within SPCs.
Roger Crombie: Most of the early cat bond ventures were based in Cayman. How is that market developing and can we expect other risks to be treated in this way?
Tom Clark: These vehicles have bolstered new business statistics over the past few years. They became more and more creative as deal followed deal and I believe it is unlikely that has stopped, or will stop. 1999 and 2000 saw fewer of these ventures involving insurance licences, because they are sometimes established using a swap rather than a reinsurance agreement and do not qualify as insurance or reinsurance. Certainly the early ventures prepared capital market investors for these vehicles. I believe they are still an alternative included in large insurers' strategic plans and that we will see further growth as reinsurance rates harden.
Clive Thursby: 2000 has been relatively quiet on this front, but I think we will see more action as the 2001 reinsurance renewal season has its effect. Few of the deals that have been done so far seem to make great economic sense, there being other motives perhaps. Price and possibly capacity are now beginning to count, which could make the capital markets a genuine alternative.
Securitising risks as a form of reinsurance requires an insurance structure but in a corporate context (such as Tokyo Disneyland's earthquake coverage) that may be less important. As Tom says, there are some interesting conceptual issues here as to what constitutes insurance, but it is the investment bankers who call the shots.
The much-heralded convergence of the capital and insurance markets has not materialised to any meaningful degree and I am uncertain whether it will. I can see the opportunities, but I can also see several practical constraints. For this reason, and also because insurance brokers are conditioned to think of insurance solutions, the idea of integrated or enterprise risk management, for which so much has been promised, has made little progress. The outcome may be determined less by what is going on in the insurance arena and more by the priority chief financial officers attach to such things and, perhaps, where the bankers see their best earnings coming from.
What is certain, however, is that Cayman has a great body of expertise ready and able to harness this interest.
Alan Craig: As has been mentioned, there has been a development of structures, which has seen many transactions of this nature move out of the licenced insurer arena. Despite an apparent slowdown in this sector, there is still interest in the opportunities that they present and recognition that Cayman is a jurisdiction that can service the requirements of these structures and is not afraid to lead in their further development.
Roger Crombie: The offshore deferred variable annuity market has seen considerable growth recently. What has been Cayman's experience, and how will the market continue to develop?
Ian Kilpatrick: The annuity side is, in fact, quite slow where the growth is on the life side. Significant estate tax and income tax deferral can be achieved by utilising variable life policies. Whilst in this politically correct world minimising your tax burden is considered to be abusive, those people who have to suffer the burden of high taxes will always seek legitimate ways to reduce their tax liability. Life and annuity policies offer this benefit, as do domestic policies. It is the greater flexibility of investments that is attracting people to offshore policies.
Alan Craig: I agree with Ian that the main interest is being shown on the life side. We are involved in some very interesting projects in this area at present and, given the level of other enquiries we are receiving, I believe that this will be an area of substantial growth over the next 12 months. Certain of the projects are very substantial and would significantly increase the Cayman asset base in this sector.
Clive Thursby: This type of business tends to be lumpy, with individual transactions skewing the overall picture, and sometimes it seems to be our fastest-growing line. The asset base of Cayman companies active in this area is now over $600m. The US population of high net worth individuals has grown dramatically in recent years, providing a very buoyant market for these products. Also, there is the suggestion (and it is no more than that at this point) that the more transparent world in which we are now operating could result in capital currently held within trusts being converted into annuities. The providers can be seen as personal captive vehicles offering advantageous access to investment funds. As such, they raise a different set of regulatory issues, including ones that are of more concern to the international community, such as: where does the money come from?
Roger Crombie: Many captive balance sheets have suffered from poor bond prices. Has this prompted changes in investment strategies?
Tom Clark: There is no doubt that captives and regulators have accepted that portfolios consisting of equities and fixed income investments may well be less volatile and risky than just fixed income portfolios. Ultimately, the maxim that insurance companies should put liquidity and preservation of principal before yield for assets that represent insurance liabilities will not be abandoned. I think it is true to say that captives have focused more on their investment strategies and choice of investment manager. This is something that happens in any case as captives mature and build significant assets. A poorly performing market may prompt an earlier focus.
Ian Kilpatrick: Most captive owners are long-term investors. I do not believe that changes in bond prices have caused significant changes of investment philosophy.
Clive Thursby: Traditionally, captives have pursued very cautious investment strategies, even when they were willing to pay heavily for investment advice. I do not think bond prices, as such, have changed that view (after all, we are usually only talking about unrealised losses which typically we make regulatory allowance for), but rather the thought of having missed out on a raging stock market. The irony is that caution in this case has been punished, and as a result this must be the only respect in which the captive sector has under-performed the insurance market as a whole.
So long as Wall Street has no more than the occasional wobble, captive directors will therefore be more interested in playing at that particular casino. Obviously that does have regulatory implications, but as all changes in investment policy require our approval, we can establish some margins for error or bad luck. Many Cayman captives have very strong balance sheets and it is not for the regulator to obstruct their more effective use, so long as insurance obligations are well funded.
Alan Craig: As Clive's comments show, Cayman regulators tend to show flexibility in the use of capital where insurance activities are well funded and this allows captive insurers to broaden their investment strategies and offers the opportunity to achieve higher investment returns for the benefit of their shareholders.
Tom Jones: In the last five or so years, there has been a steady trend towards investing in a higher percentage of equities in captive portfolios. In healthcare, another significant factor is at work: Medicare rules limit equity investments to 10% of the portfolio. Compliance with Medicare requirements has become less and less important as the US system is moving away from cost-based reimbursement to a prospective payment system - i.e. a fixed amount of money at the front end. This year, for example, outpatient care is transitioning away from cost-based reimbursement. About all that's left for Medicare to reimburse on a cost-based approach is rehabilitation services and mental health care, both of which are difficult to price in advance. So captive owners are comparing the magnitude of the benefit from including premiums paid to the captive in Medicare cost reimbursement reports against the possibility of higher investment returns from more equities in the portfolio.
Roger Crombie: International pressures are likely to increase the level of regulation in offshore centres. As Cayman has always prided itself on its pragmatic approach to regulation, will these changes undermine its appeal as a captive domicile?
Clive Thursby: I actually welcome the scrutiny the offshore financial community has been under recently. It may be misinformed and confused in its methods and conclusions, some might say mischievous if not downright mendacious, but it has thrown down a challenge that Cayman is happy to respond to. We are not frightened of international comparisons and we are happy to have a further incentive to raise standards. The result can only be a competitive advantage we look forward to exploiting.
As far as our insurance sector is concerned, many of the legislative changes Cayman has recently made or committed to are not that significant. Their focus is more directed at banks, trust companies and mutual funds.
In fact, we are already largely compliant with the International Association of Insurance Supervisors standards, the international benchmark for insurance supervision. That is not just my opinion but also the conclusion of a recent assessment by KPMG of six British Overseas Territories in these parts. Reading their report, and also the 1998 Edwards Report on islands on the other side of the Atlantic, I believe Cayman can convincingly claim to have the most advanced regulatory regime of any captive domicile.
And that means we are in a higher league than some industrialised nations, which incidentally could be the reason why the OECD initiative will eventually run out of steam.
However, we are not complacent and we are building on the strong platform we already had; but, as in the past, in a manner that is business-related and avoids bureaucratic overload.
If we are presented with a good business case for some captive proposition, we will try to help make it happen. That is not going to change. Proposals that are more fanciful, or promoters whose probity is more doubtful, are not going to pass that test, but we were never keen on that type of business anyway. The Monetary Authority is fortunate in that Cayman's distribution system has some very effective filters; silly or rogue ideas just do not get through.
We like to discuss all aspects of a business plan with its proponents and where there is disagreement about what is suitable, we seek a reasoned resolution. Sometimes we are persuaded to change our view, sometimes not; in the latter case, we will explain why and often suggest a better way of achieving the ultimate aim. We see this type of interaction as a vital part of the regulatory process, and we intend to do more of it.
Tom Jones: I do not believe that these changes will undermine the Cayman appeal as a blue chip domicile in the captive sector. But they may impact the banking and trust sectors, where confidentiality is more of an inducement. Captive owners do not care about money laundering regulations, at least so long as their competitors do not have access to detailed information about their business activities or to their claims data.
Ian Kilpatrick: Unfortunately, I believe that Cayman reacted too swiftly to pressure from the Financial Action Task Force. While Cayman clearly does not want to be on the blacklist, the rushing of legislation through the Assembly was, in my opinion, undemocratic. I believe that the legislators acted in panic, rather than with reason.
Alan Craig: There has been much criticism of the methodology applied by some of the international agencies and the “name and shame” tactics that have been employed. This aside, given the high standards employed in the insurance industry in Cayman (which is supported by the reporting obligation incumbent on insurance managers in terms of the insurance law, where there is cause to question the probity or soundness of any of their client companies), the changes being implemented in many cases merely formalise the high standard of regulation already being applied. Business that decides not to come to Cayman as a result of the changes being implemented is most likely the business that Cayman does not want. The recent developments may actually assist Cayman by dispelling some long-held misconceptions.
Tom Clark: We should remember that the increased level of regulation will apply to all international centres. The centres that resist international co-operation will have difficulty in continuing to do business. Clients will not wish to do business in centres which resist international co-operation. Only the centres that have sufficient critical mass will be able to support the level of supervision required by the international community. Cayman is well prepared to deal with these demands.
Roger Crombie: A general election will be held in Cayman this year. How important is the result likely to be for the captive sector?
Clive Thursby: As a public servant I am probably not allowed to comment, and it is a rash man who makes political predictions, but I do not expect any changes that would be unwelcome to the captive industry here. The US elections, however, could be of greater consequence.
Alan Craig: The value of the financial sector to the Islands and its impressive growth record is recognised, generally, by local politicians. Accordingly, the specific results of the elections are not likely to change the general policy applied in the captive sector.
Ian Kilpatrick: Over the past 30 years, a change of government has resulted in little change to the way in which the financial community has operated. The lack of political parties is perhaps the main reason there has been so little or no swing to the left or the right. It is important that our legislators are respected in world circles, and so long as middle-of-the-road candidates are elected, I see little change in policy on the horizon.
Tom Clark: I agree. As in the past, the results of the election are not likely to have any impact on the captive industry in Cayman.
Roger Crombie: How important is the choice of captive domicile? Why do some captives move location?
Tom Clark: In a few years' time, there will be fewer domiciles available, because smaller domiciles that do not have the resources to respond to international standards of regulation will be driven from the market.
Cayman has ensured its long-term future in this scenario with its response to the international requirements, its depth of experience and proven creativity and responsiveness in the captive industry.
Ian Kilpatrick: The choice is very important. I believe that every captive owner is looking at Cayman very carefully. The increased regulation that has been focused on Cayman by the OECD and FATF could result in higher operating costs. This is a competitive world and costs are important to many captive operators. I hope that common sense prevails and licence fees and other costs are not increased. I, for one, wonder how the increase in the number of regulators will be paid for.
An approachable Monetary Authority is essential and hopefully the change that is taking place at the present time in regulation will not result in a move to other domiciles. People can be fickle and a high-handed approach to regulation could see some companies move elsewhere.
Tom Jones: Domiciles are selected for a multitude of reasons. Over the past several years, I am unable to spot a clear trend between offshore and onshore; that is, there seems to be no systematic net movement between the two. Re-domiciling is virtually always an individualised decision, made for specific reasons. An illustration is that some captives, in order to facilitate loan-backs to their US parent companies, move onshore to avoid the 30% Federal withholding tax on actual or imputed interest payments. In general, tax-exempt organisations, such as hospitals and colleges, are still better off offshore than onshore, although there are always exceptions.
Clive Thursby: It is well known that the most difficult decision when setting up a captive is what to call it. Choice of location is comparatively easy, and in many cases does not require a long debate. In practice, the dynamics of the business proposition tend to produce an answer.
Certainly, Cayman does not consider itself to be in competition with the 50 or so other captive domiciles. The good-natured rivalry that is seen at conferences and exhibitions is largely ritualistic (and, of course, it helps to justify trips away from our island retreats).
Most entities that would find Cayman appealing (and whose proposals we would find acceptable) face at most two choices: onshore versus offshore and then Cayman versus Bermuda. In many cases, the outcome is actually a foregone conclusion. A sense of good fit seems to occur fairly easily, if only at the prompting of some advisor. In my prior life as a consultant, I used to say that the success of a captive does not depend on where it is located. From my new perspective, I am less sure about that. What I do know is that when we get into a beauty contest that involves a visit to Cayman by the principals we would expect to win it.
And, occasionally, people do change their minds. Redomiciliation is very much a minority sport but it seems to be growing in popularity. Of course, the way we view it here is that if a captive transfers to Cayman, it is because the owners have seen the light, whereas if they leave, it must be the result of some extraneous factor over which we have no control.
In fact, circumstances can change and with them requirements that may be better met elsewhere. Also, the idea of best fit can be very subjective; change the personalities and sometimes the answer changes as well. Cayman has been a net gainer in these moves (by about three to one) and I would expect that to continue. In a few cases, that has almost already happened with the formation here of “bolt hole” companies that are primed to accept a rapid transfer of business from another jurisdiction, the stability of which may be in question.
Alan Craig: The choice of captive domicile is indeed important. The expense and inconvenience of a transfer of location is best avoided by getting the decision right first time. The choice will be based on a wide range of factors. Specific structural issues aside, the key issue is finding the jurisdiction in which the principals feel they can best do business.
The close-knit nature of the industry in Cayman promotes this, as does the long tenure of the key players, which in turn promotes the development of long-term relationships.
Roger Crombie: Accounting standards for insurance operations have become more demanding about such matters as risk transfer and reserving policies. Will the effect of the new standards be to inhibit the continued use of captives?
Tom Jones: To have ‘insurance' under both accounting and tax rules, there must be real risk transfer and real exposure to an ‘insurance' loss.
In the future, it is likely there will be even more emphasis on distinguishing between true insurance transactions on the one hand, and banking deposit transactions on the other. Mere possibility of an investment loss or a creditor declaring bankruptcy is not sufficient. You need a material risk of a real economic loss to create insurance.
Tom Clark: I think sense will prevail. With due respect to the accounting industry, it has attempted to push captives into the traditional insurance industry as far as accounting standards and audit risks are concerned, rather than recognising it as part of an alternative risk transfer (ART) industry.
I do not think accounting issues will determine the use of captives, which is more reasonably based on commercial considerations. Cayman is a good example of insurance managers, regulators and auditors working together to provide solutions to captive issues, and this will continue.
Ian Kilpatrick: As Tom says, captives are formed for sound commercial reasons. Accounting regulations or requirements should have little effect on them.
Clive Thursby: Let us not forget that, without accounting rules, there would probably be no captives. Insurance accounting within captives creates real value for non-insurance groups. Nevertheless, auditors have tended to be killjoys when it comes to innovation in risk financing, and some of their arguments, if taken to their extremes, could destroy anything with an ART spin to it.
I do not think that will happen, because auditors are pragmatic people who would rather not be arguing with their clients every year.
Audited financial statements are a vital supervisory input. My concerns about them are three-fold: (1) there are inconsistencies emerging in how the numbers are presented; (2) if deposit accounting is adopted (because of an insufficient transfer of risk) you are no longer looking at an insurance operation, which is what we thought we were regulating; and (3) I fear that we may see ever more restrictive FASBs and SOPs that may make sense for the AIGs and AXAs of this world, but are simply inappropriate for a captive, which typically is a very basic insurance structure, possibly with one insured and a single policy.
Of course, we could solve these problems at a stroke by introducing Cayman GAAP and making it mandatory. That would be a drastic solution and one that would run counter to our philosophy of being user-friendly and not adopting a “one size fits all” mentality.