Cayman is developing into a 21st century model of how capital markets can meet the needs of reinsurance. The scope for new capital markets vehicles to underwrite reinsurance risk is growing, and Cayman has the professional infrastructure and the legal, regulatory and tax environment to welcome them. Following several active hurricane seasons, Cayman has become a centre for catastrophe insurance securitisations and sidecar reinsurance vehicles.
For underwriters of catastrophe risks, the tension between holding enough capital to satisfy regulators and rating analysts, and generating acceptable returns for investors, is creating opportunities for alternatives to traditional equity structures. At the same time, there is a demand for new asset classes with the potential for enhanced returns.
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