Insurance (Capital and Solvency) (Classes B, C and D Insurers) Regulations (2018 Revision)

Summary

This regulation sets out the capital and solvency requirements that apply to Class B, Class C and Class D insurers licensed under the Cayman Islands Insurance Law, 2010.

• Admissible assets: Defines categories of admissible assets (Class 1 through Class 8, graded by credit quality and liquidity) used in solvency calculations.
• Capital requirements: Prescribes the Minimum Capital Requirement (MCR) and Prescribed Capital Requirement (PCR) that each class and sub-class of insurer must maintain, with specific dollar thresholds and risk-based formulas set out in Schedule 1.
• Reporting template: Prescribes a standard Capital Requirement Template (Schedule 2) that insurers must use to report their capital position.

Insurers must maintain solvency at or above the PCR. The regulation establishes escalating consequences if capital falls below prescribed levels.

• Capital between MCR and PCR: The insurer must meet with the Cayman Islands Monetary Authority (CIMA) and present a remedial action plan.
• Capital below MCR: CIMA may take regulatory action.

• CIMA discretion: The Authority retains discretion to require a higher level of capital based on an insurer's specific risk profile.
• Internal capital models: CIMA may approve internal capital models as an alternative to the Schedule 1 formula for Class B(iii) and Class D insurers.
• Reduced MCR for new Class D applicants: CIMA may approve a reduced minimum capital requirement for new Class D licence applicants on terms it specifies in writing.

Insurers are also required to submit a capital and solvency return to CIMA by their filing date (the date on which their annual return is due under the Law) and to retain a copy of that return at their principal office for five years, producing it to CIMA on request.

This is a consolidated 2018 revision of regulations originally made in 2012 and amended in 2016; it does not appear to introduce new substantive requirements beyond consolidating the existing text.

Key obligations

• Class B, Class C and Class D insurers must, at each filing date, calculate and record their minimum capital requirement, prescribed capital requirement (and enhanced capital requirement if applicable) using the Schedule 2 Capital Requirement Template.
• Class B, Class C and Class D insurers must maintain solvency equal to or in excess of the total prescribed capital requirement, unless otherwise approved by the Authority.
• Where a licensee's capital falls below the prescribed capital requirement but remains above the minimum capital requirement, the licensee must meet with the Authority and present a remedial action plan.
• An insurer must furnish the Authority with its capital and solvency return on or before its filing date.
• An insurer must keep a copy of its capital and solvency return at its principal office for five years beginning with its filing date and produce it to the Authority if directed to do so by a specified date.
• A class B(iii) or class D insurer wishing to use its own internal capital model in place of the Schedule 1 prescribed capital requirement must obtain the Authority's approval.

Applies to

Class B insurers, Class C insurers, Class D insurers

Deadlines

• on or before its filing date: An insurer must furnish the Authority with its capital and solvency return by its filing date (the date it is required to submit its annual return under the Insurance Law).
• five years beginning with its filing date: An insurer must retain a copy of its capital and solvency return at its principal office for this period and produce it to the Authority if directed.
• at each filing date: An insurer must calculate and record its minimum capital requirement and prescribed capital requirement in the Schedule 2 form.

Related documents

• This document is made under Insurance Law, 2010 (Law 32 of 2010)