Insurance (Capital and Solvency) (Classes B, C and D Insurers) Regulations (2018 Revision)
Establishes the risk-based capital framework, admissible assets, and solvency margins for Class B, C, and D insurers in the Cayman Islands.
Insurance_(Capital_and_Solvency)_(Classes_B, _C_and_D_Insurers)_Regulations_(2018_Revision).pdf
2026-04-27
These regulations define the capital and solvency requirements for non-domestic insurers (Classes B, C, and D) operating from the Cayman Islands.
Capital Requirements
Insurers must maintain capital that meets or exceeds two key thresholds:
- Minimum Capital Requirement (MCR): A fixed minimum amount based on the licence class. For example, Class B(i) general insurers need US$100,000, while Class D insurers require US$50,000,000.
- Prescribed Capital Requirement (PCR): A total risk-based capital measure.
- For Class B(i) and Class C, the PCR is generally equal to the MCR.
- For Class B(ii) and B(iii), the PCR is calculated as a percentage of Net Earned Premium (NEP).
- For Class D, the PCR is calculated based on a complex formula involving total premiums, reserves, assets, and catastrophe risk.
Class B(iii) and Class D insurers may use their own internal capital model to calculate the PCR, subject to approval by cima.
Admissible Assets
The regulations define eight classes of "admissible assets" for the purpose of calculating the margin of solvency. These range from high-quality, highly liquid assets (Class 1) to lower-quality or intangible assets (Class 8):
- Class 1: Cash, cash equivalents, investment-grade government obligations, acceptable letters of credit.
- Class 2: High investment-grade bonds, exchange rate derivatives, receivables from highly rated reinsurers.
- Class 3: Investment or bank-grade bonds, recent accounts receivable.
- Class 4: Term deposits, medium-grade bonds, receivables from medium-rated reinsurers.
- Class 5: Lower investment-grade bonds, medium-rated reinsurer receivables over 12 months.
- Class 6: High-rated mortgage-backed securities, common shares, mutual funds, real estate.
- Class 7: Older receivables, residential mortgages, unlisted equities, private equity funds.
- Class 8: Deferred policy acquisition expenses, intangible assets (with limits), other loans, non-investment grade term deposits.
Regulatory Action
- If an insurer's capital falls below the PCR but is above the MCR, the licensee must present a remedial action plan to cima.
- If capital falls below the MCR, cima may consider further regulatory actions.
Reporting
Insurers must furnish cima with a capital and solvency return on or before their filing date and keep a copy at their principal office for five years.