Former State Insurance Commissioner sounds alarm on Cayman reinsurance

A prominent former State Insurance Commissioner has spoken out regarding his concerns about the substantial growth of the reinsurance market in the Cayman Islands and the strength of its regulators.

“A rapidly growing blind spot in the security net deserves far closer scrutiny from U.S. insurance regulators: the Cayman Islands reinsurance market,” wrote Thomas Leonardi, a former Connecticut State Insurance Commissioner, in a recent commentary piece for ThinkAdvisor.

According to the Cayman Islands Monetary Authority, the jurisdiction has over $101 billion in reinsurance assets as of the end of 2025, compared to $23 billion in 2020. 

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The number of Cayman reinsurance companies has reportedly gone from 58 to 113 in that same time period.

Leonardi served as Connecticut Insurance Commissioner from 2011 to 2014. 

In his recent commentary, he has focused on the Cayman Islands insurance regulatory regime, noting that, “differences in approach, regulatory infrastructure, and transparency are cause for significant concern.” 

He points to lessons learned as a regulator after the 2008 financial crisis. 

“One lesson from that period has remained with me: Regulatory frameworks must continually adapt to new and evolving sources of risk.”

In a subsequent social media post, the former commissioner expanded on his comments about the Cayman regulator, raising concerns about transparency and rigor: 

“It has neither a prescribed reserving standard nor a prescribed capital model…And Cayman reinsurers are not required to publicly disclose their financial statements.”

As evidence for the growing risk posed by the sector, Leonardi pointed to an assessment by Moody’s: “Moody's recently characterized the growth in U.S. life reinsurance activity in Cayman as a net credit negative, citing counterparty risk and comparatively limited transparency.” 

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He encouraged U.S. regulators to heed those concerns.

“Assessments like Moody's should prompt scrutiny by regulators responsible for safeguarding U.S. policyholders.”

With Leonardi, a former U.S. state regulator, weighing in with specific warnings, the conversation about reinsurance risks in the jurisdiction, and regulatory visibility and oversight, is growing. Other industry voices have also recently weighed in.

In an analysis released in March, Red Deer Investments concluded, “The structural arbitrage currently being executed in the Cayman Islands is not a sustainable business model; it is a regulatory waiting game. By stacking tax, capital, and labeling loopholes, this tier of storefronts has manufactured the illusion of solvency while stripping away the very infrastructure required to survive a credit cycle.”

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