New regulation from the Cayman Islands Monetary Authority (CIMA) will likely result in most captives having to substantiate documentation around their investment portfolio strategies (IPS) from February, according to Darren Treasure executive director, Caribbean at London & Capital.
“Most will probably have some slight beefing up to do in terms of including some additional documentation around their IPS to satisfy the regulator,” Treasure said in a recent GCP Short episode.
“I would imagine the insurance manager along with the asset manager and the client will review their investment policy statement to see where the gaps lie.”
CIMA issued the new rules for investment activities of insurers in February 2022, which allows for a one-year grace period, and will therefore be in effect from February this year.
The regulator is looking to impose the new rules on investment activities in order to set clearer guidelines on regulatory investment requirements, so that solvency, liquidity, and all other relevant risks are considered when investing.
“It’s making sure that the board has oversight over the investment policy statement and the investment portfolio,” said Rob Leadbetter, SVP at USA Risk.
“The regulation also makes sure that the board is looking at their investment portfolio with a risk management mindset, and making sure that they’re in the right asset mix, the right duration, and the type of investments they’re making makes sense for the business that they’re in.”
Darren Treasure said that he suspects some of the smaller captives might find the new regulation more onerous.
“Just because of resources and the time it might take to just put all the documentation in place, if that’s kind of the level that CIMA is looking for,” he added.