In June 2026, the Cayman Islands Monetary Authority (“CIMA“) published the findings of its thematic review of reinsurers within the Class B(iii) and Class D licence categories. The review examined four key thematic areas — stress testing, cash flow testing frameworks, capital and collateral adequacy management, and corporate governance practices — with the objective of assessing compliance with the Insurance Act and other applicable legislation, regulations, rules, and statements of guidance. Fieldwork took place between mid-2025 and the first quarter of 2026. In addition to evaluating regulatory compliance, CIMA sought to assess alignment with recognised industry standards and sound practices.
The findings offer a useful snapshot of current supervisory expectations. Gaps in corporate governance accounted for 68% of the identified weaknesses, while gaps in stress testing accounted for 14%, and cash flow testing and capital and collateral adequacy management each accounted for 9%.
Within corporate governance, the most common issues related to sub-committee governance and board oversight deficiencies. Other weaknesses included deficiencies in contractual agreements with service providers, inadequate segregation of duties — including in the pricing and approval of reinsurance treaties — and lack of an effective internal audit function. In the area of stress testing, weaknesses centred on the lack of independent or peer review, insufficient evidence that stress testing had been performed, and inadequate board oversight.
Notwithstanding the weaknesses identified, CIMA noted good practices across several entities, including comprehensive risk management frameworks, well-defined risk appetite frameworks guiding the review of reinsurance treaties, periodical board reporting on financial performance and key risk indicators, and robust capital and collateral adequacy monitoring processes. Several entities also demonstrated well-established stress testing frameworks, with annual stress tests conducted under multiple scenarios.
We are pleased to report that the Maples clients known by us to be included in the review each received a clean bill of health with no adverse findings — confirming that our clients were found to be fully compliant with CIMA’s expectations regarding best practices.
CIMA has reminded all regulated entities of their obligation to maintain policies, procedures, systems, and controls that are appropriate, effective, and proportionate to the nature, scale, and complexity of their business. Where deficiencies were identified, CIMA engaged directly with entities and provided recommendations to support timely remediation. Entities are expected to continue strengthening their governance and risk management frameworks to promote long-term financial resilience.
We encourage reinsurers to take this opportunity to re-examine their practices and to reach out to their usual Maples’ contacts for assistance with updating to their policies and procedures.
