Cayman Reinsurance Group has just set up operations in the Cayman Islands.

Wayne Ross explains the logic behind his company's choice of domicile.

Reinsurance companies have recently started setting up operations and locating people in Cayman. Large reinsurance companies have incorporated in Cayman in the past, but they have subsequently set up operations in Bermuda or other jurisdictions. The two companies which have chosen to stay and operate from the Cayman Islands are Cayman Reinsurance and Scottish Annuity and Life Insurance.

Scottish Annuity provides reinsurance of in-force blocks of annuity and life insurance obligations and customised variable life insurance products to high net worth individuals and families. Scottish Annuity has beencapitalised with US$250 million and was listed on the New York Stock Exchange towards the end of 1998. Cayman Reinsurance has been organised to provide reinsurance and retrocession support in the life, annuity, and health sectors, with an Initial capitalisation also anticipated at US$250 million. A team of seasoned professionals in the (re)insurance and financial disciplines has been assembled and is now located in the Cayman Islands.

Cayman Reinsurance is not competing in the traditional reinsurance markets. Those are dominated by knowledgeable, highly capitalised and well staffed companies that are organised to handle large volumes of very competitively priced mortality and morbidity risk. Instead, the initial emphasis is on providing retrocession support for guaranteed death, income and performance benefits offered by distributors of mutual funds, variable annuities and equity-indexed annuities.

Cayman Reinsurance's management, which is responsible for the risksassumed, has placed numerous treaties in this arena and has accumulatedexpertise in marketing, evaluating and pricing this business.

Choice of domicile
These two reinsurance companies chose the Cayman Islands as their domicile for many reasons. • The lack of direct taxation and the ability to accumulate profit free of tax was an important starting point that matched Cayman equally with other offshore jurisdictions operating within the same tax environment.

• The openness and efficiency of the Cayman Islands Monetary Authority (CIMA), along with the fact that insurance professionals run the insurancesupervision division, were the most important factors in the decision by the management of Cayman Reinsurance to domicile the company there. • The Cayman Islands authorities' discretion in such areas as liquidity ratios and capital formation, with more than a decade of successful operation, administration and development of the Insurance Law, were also important considerations.

• The political and social stability of the Cayman Islands helped to provide the certainty that any business is looking for when making this initial decision on domicile. There is a healthy business environment as a result, with all the required professional support, complemented with a full range of telecommunication choices.

• Convenient airline connections connect Cayman with the rest of the world via Miami. Excellent medical and educational systems in Cayman for the executives and their families were also key factors. The stable and safe environment of the Cayman Islands has resulted in a life style for residents that is the envy of all the other Caribbean islands.

The management of Cayman Reinsurance is confident that the Cayman Islands will continue to thrive as a first class offshore jurisdiction and that the authorities in Cayman will respond appropriately to the changes in market conditions in the future. The Segregated Portfolio Companies Act recently put in place is an example of legislation that will keep Cayman at theforefront in the insurance industry. With the private and public sectors continuing to work together, the prospects for stable and continued growth are excellent.

Wayne Ross is the chief financial officer of Cayman Reinsurance Group. Hehas worked in a number of jurisdictions, including Canada, the US, the UKand, lately, the Cayman Islands.