The Cayman Islands has built much of its reputation as an offshore financial centre on banking. Its latest numbers point to an industry that is changing shape.

Cayman had 110 licensed banks in 2020. At the end of 2025, it had 77.

Insurance has been moving in the other direction.

The number of international insurers and reinsurers rose to 720 from 652 over the same five years. More strikingly, their assets climbed to US $176.2 billion from US $70.8 billion - an increase of almost 150%.

The diverging numbers do not mean Cayman is simply swapping banks for insurers. Global consolidation has reduced bank numbers in several competing financial centres, and the Cayman Islands Monetary Authority (CIMA) says the remaining banking sector is financially sound.

But beneath the headline figures is a potentially more consequential shift. Cayman’s international insurance industry, historically dominated by captive insurers set up by companies to cover their own risks, is attracting larger commercial insurers and reinsurers.

CIMA describes a “marked shift in the scale and sophistication” of participants in the insurance market, with several multi-jurisdictional groups establishing operations as the life and annuity sector gains momentum.

“The insurance sector continued to be a cornerstone of the jurisdiction’s financial services industry,”

CIMA Chief Executive Cindy Scotland said in the regulator’s 2025 annual report, citing continued growth in commercial insurance and reinsurance formations.

The expansion is drawing Cayman further into the international reinsurance market, particularly business connected to the U.S. CIMA has been pursuing Qualified Jurisdiction status from the US National Association of Insurance Commissioners, a regulatory designation relevant to the treatment of overseas reinsurers in the American market.

“We have continued to position the jurisdiction to respond effectively to an increasingly complex and fast-moving global financial environment,” Scotland said.

Banking’s Long Retreat

The decline in Cayman’s bank count has been steady.

There were 110 licensed banks in 2020, falling to 101 in 2021, 94 in 2022, 87 in 2023 and 79 in 2024. The total dropped again to 77 last year.

That is a decline of 30% in five years.

The amount of international banking business booked through Cayman has also fallen from recent highs.

Cayman-licensed banks reported US $325 billion in cross-border assets at the end of 2025, ranking the jurisdiction 21st internationally, according to Bank for International Settlements data cited by CIMA. Cross-border liabilities stood at US $276 billion.

CIMA’s figures show cross-border assets at around US $500 billion at the end of 2021.

Falling bank numbers are not unique to Cayman. CIMA’s comparison of financial centres shows declines between 2020 and 2024 in the Bahamas, Panama, Jersey, Luxembourg, Switzerland and Hong Kong.

Scotland attributed Cayman’s latest reduction, from 79 banks to 77, largely to “consolidation and strategic restructuring at the international level”.

“The sector remained financially sound, with strong capitalisation, low levels of non-performing loans, and asset quality comfortably within regulatory expectations,” she said.

The distinction is important. A bank surrendering a Cayman licence because an international group has consolidated operations or changed where it books business is not the same as a bank failing.

The numbers nevertheless show a contraction in two measures of Cayman’s international banking footprint: licence numbers and cross-border assets.

Insurance, meanwhile, has been getting bigger.

Reinsurance Moves In

Cayman’s international insurance business has its roots in an American crisis.

During the US medical-malpractice crisis of the 1970s, healthcare organisations struggling to obtain commercial insurance began forming captive insurers in Cayman to cover their own risks. The industry was formalised under Cayman insurance legislation in 1979.

That captive heritage remains dominant.

About 70% of companies in Cayman’s international insurance market are still self-insurance vehicles, according to CIMA. Commercial insurance and reinsurance companies account for the remaining 30%, but those businesses dominate the sector’s written premiums.

CIMA says Cayman is attracting “major commercial operators”, with increased licensing in the Class B(iii) and Class D categories and particular growth among commercial insurers and reinsurers writing life and annuity as well as property business.

The balance sheets show the scale of the change.

Assets across the international insurance and reinsurance sector stood at US $70.8 billion in 2020. They edged up to US $75.2 billion in 2021 and slipped to US $74.1 billion in 2022.

Then came the jump.

Assets reached US $138.7 billion in 2023, US $152.8 billion in 2024 and US $176.2 billion last year. International premiums reached US $51.2 billion in 2025.

The number of international insurers and reinsurers increased far more gradually, from 652 to 720 over the five years.

That difference matters. The licence count increased by roughly 10%, while assets rose by almost 150%.

CIMA itself says there has been a “marked shift in the scale and sophistication” of the companies entering the market.

Forty-two new international insurance licences were formed in 2025, matching 2024, compared with 41 formations in 2023 and 37 in 2022.

The net increase was smaller because licences were also cancelled. CIMA issued 42 new Class B, C and D licences in 2025 while 19 were cancelled, taking the year-end total from 697 to 720.

The result is an insurance industry that is not only larger, but increasingly weighted towards commercial business.

The Pull of the U.S.

The U.S. sits at the centre of Cayman’s insurance expansion.

CIMA says Cayman’s international insurance market remains “predominantly driven by U.S business”, meaning developments in the American market have a “direct and immediate influence” on Cayman.

That connection is especially important in reinsurance, where insurers transfer portions of the risks they have underwritten - and the capital associated with them - to other insurance companies.

One area of particular growth is life and annuity business. CIMA says several multi-jurisdictional groups have established Cayman operations as that part of the market has gained momentum.

The regulator expects reinsurance growth to continue. It says the sector has recorded “notable growth” during the past five years and forecasts further expansion, alongside continued demand for group captives and segregated portfolios.

Cayman is also seeking closer regulatory recognition in the US.

CIMA continued work during 2025 towards achieving Qualified Jurisdiction status from the National Association of Insurance Commissioners. The regulator engaged with government and industry stakeholders and participated in the NAIC Summer National Meeting.

The annual report does not quantify how much additional US business such recognition could generate. Nor does it establish that the rise in insurance assets since 2020 resulted from the initiative.

Those distinctions matter. The evidence establishes rapid insurance growth alongside an effort to deepen Cayman’s standing with US insurance regulators. It does not establish that one caused the other.

What it does show is a regulator preparing for a market whose participants are getting bigger.

Regulation Grows With the Market

A larger and more complicated insurance sector brings greater supervisory demands.

CIMA is in the advanced stages of determining which insurers should be considered domestically systemically important, using both a traditional framework and that of the International Association of Insurance Supervisors.

It has added insurance stress testing to its financial-stability work and began developing an Insurance Sector Digest in 2025, with publication expected in 2026.

Garth MacDonald, who chaired CIMA’s board during the reporting period, said the regulator was focused on ensuring its framework “continues to evolve alongside the financial services industry it oversees”.

There is evidence outside CIMA that prudential scrutiny is becoming more detailed across Cayman finance.

Martin Byers, a Cayman partner at law firm Appleby, said in a regulatory briefing that CIMA’s introduction of a new prudential information survey for securities businesses signalled its “continued focus on enhancing the resilience, transparency and prudential soundness” of the sector.

The regulator is also strengthening crisis planning for the part of the financial system that is contracting.

CIMA hosted an International Monetary Fund technical-assistance mission in March 2025 covering early intervention, recovery planning, cross-border cooperation, inter-agency crisis management, resolution planning and crisis simulations.

The final IMF report contained “recommendations and a roadmap to strengthen the jurisdiction’s financial crisis preparedness and supervisory resilience”, according to CIMA.

That does not mean the IMF found Cayman’s banks to be in distress. It does show that CIMA is strengthening the machinery it would use if a significant institution encountered trouble.

The picture is therefore more complicated than insurance simply replacing banking. Cayman is increasing its capacity to supervise a growing insurance industry while strengthening the infrastructure around its remaining banks.

The $176 Billion Question

The headline numbers leave a harder question: What does the expansion actually mean for Cayman?

US $176.2 billion is an enormous pool of assets relative to the islands’ domestic economy. But assets held by Cayman-domiciled insurance companies should not be confused with money physically invested in Cayman.

CIMA’s annual report does not establish how much of those assets are managed from the islands, how many local jobs have resulted from the expansion or how much additional government revenue commercial insurance and reinsurance growth has generated.

Those are important gaps.

A company can be domiciled and regulated in Cayman while its assets, policyholders, investments and wider operations span several countries. The economic benefit to Cayman instead flows through channels including employment, government and regulatory fees and spending on lawyers, accountants, insurance managers, directors and other professional services.

There are signs of what increasingly sophisticated regulation means for the industry.

Byers said CIMA’s new prudential survey for securities businesses requires firms to provide information about their activities, exposures and sector-specific risks. Appleby said CIMA intended to use the information to build a more detailed picture of the sector it supervises.

The regulator itself is also getting bigger.

CIMA ended 2025 with 326 employees, up from 306 a year earlier. Its employment costs rose about 13% to CI $37.6 million, roughly twice the rate of workforce growth.

That does not show how much of the increase was caused by insurance. CIMA is simultaneously expanding oversight of virtual assets, financial crime and other regulated sectors.

It does illustrate a broader consequence of Cayman’s changing financial centre: supervising more sophisticated businesses requires expertise, technology and money.

A Different Kind of Systemic Risk

None of this means Cayman is finished with banking.

Its banks remain well capitalised, according to CIMA, and the decline in licences partly reflects consolidation among international groups rather than institutions failing or abandoning the jurisdiction.

Insurance is not a substitute for banking either. The businesses serve different purposes, and the billions of dollars held by Cayman-domiciled insurers should not be mistaken for money sitting or being invested on the islands.

The more telling change is in what Cayman is preparing to regulate.

The insurance companies arriving now are different from many of the captives that established Cayman as an insurance centre decades ago. CIMA says several multi-jurisdictional groups have established operations as the life and annuity sector expands, part of what it calls a “marked shift in the scale and sophistication” of the market.

CIMA is now working to determine which insurers should be designated domestically systemically important. It has begun insurance stress testing and is developing a dedicated Insurance Sector Digest.

For years, Cayman watched the number of banks on its register steadily decline.

Now its regulator is preparing for a different possibility: that some of its insurers are becoming too important to ignore.