Private equity firm backed reinsurer Southport Re, which writes much of the reinsurance coverage it provides on a fully collateralized basis’, has made the Cayman Islands into its home after taking advantage of recent changes to the jurisdiction’s insurance laws and changing its company classification.
Southport Re has migrated from a Class B captive insurer license to its new Class D open-market reinsurer license. Both classes of insurer are fully regulated by the Cayman Islands Monetary Authority (CIMA) but, as a Class D reinsurer, Southport Re is now required to operate an office base on the islands.
Prior to the change, Southport Re was a captive insurance vehicle and so could be managed by an administrator without having a physical presence on the Cayman Islands. Moving to a Class D reinsurer shows that Southport Re’s owner, the Southport Lane private equity and asset management firm, is serious about growing the contribution reinsurance makes to its balance sheet and delivering larger returns from reinsurance to its investors.
“Southport Re is a significant addition to our financial services community”, commented Dr Dax Basdeo, Chief Officer in the Ministry for Financial Services of the Cayman Islands. He added; “Southport Re’s decision to migrate from a Class B to a Class D insurer underscores our strength and competitiveness in our reinsurance sector”.
Glenn Weber, CEO of Southport Re, commented; “Southport Re continues to view Cayman as an attractive location for our reinsurance business. The common-sense approach to regulation, and the knowledge and experience of CIMA staff combined with a great service sector, makes the Cayman Islands an ideal location for us.”
Southport Re is still building out its reinsurance platform, having completed a number of acquisitions and expressed an ambition to offer alternative risk transfer solutions. The firm underwrites business on a fully collateralized basis using segregated cells and will feed premiums earned back to the parent private equity and asset management group. It targets lines of business outside of the usual catastrophe risk, focusing on casualty lines as well. It has strict volatility targets for the business it writes and aims to capitalise on reinsurance premiums for its parent company and investors.
Other reinsurers domiciled in the Cayman Islands as Class D reinsurers include Greenlight Re, the reinsurance firm backed by hedge fund Greenlight Capital.