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Aon, Gallagher buy Cayman Islands operations


GRAND CAYMAN, Cayman Islands--Two of the world's largest brokers have made acquisitions designed to expand their insurance operations in the Cayman Islands.

Aon Insurance Managers (Cayman) Ltd. has acquired a 50% stake in Cayman National Insurance Brokers Ltd., a unit of Cayman National Corp., in a deal that could make the combined entity the largest brokerage firm in the domicile, said Daniel MacLean, managing director of the Aon unit.

The deal will allow Aon to bring its vast insurance brokerage resources to Cayman National's extensive client base in the Cayman Islands, he said. Cayman National is the largest retail and financial bank in the domicile.

While the deal is not expected to be a major driver of new captive business for Aon, the agreement presents a significant opportunity for growth of reinsurance operations, particularly as Cayman Island regulators explore ways to facilitate its development as a reinsurance domicile, said Mr. MacLean, who will manage the joint venture.

Meanwhile, Gallagher Captive Services (Cayman) Ltd. will acquire Fair Winds Captive Management (Cayman) Ltd., effective Jan. 1, as part of its effort to expand its captive operations in the domicile. The combined entity will manage 15 captives, seven of which are group captives, with more than $100 million in premium volume. John Pitcairn, president of Fair Winds, will manage the combined entity.

Previously, Gallagher subcontracted management of its Cayman Island captive operations to Mr. Pitcairn; but the company wanted to establish its own presence in the domicile because it sees opportunities for substantial captive development in the Cayman Islands, particularly in the group captive sector because the domicile has the best regulatory climate for group captives, said Peter Mullen, director of Gallagher's captive operations in Bermuda.

"We are anticipating more growth," Mr. Mullen said. "I think by combining all of our operations, we're going to see some efficiencies and opportunities to collaborate."

The acquisition coincides with a movement by Gallagher to consolidate its captive management operations worldwide under a new brand effective Jan. 1, Mr. Mullen said.

The acquisitions were announced this week during the annual Cayman Captive Forum by company officials and Mary Lou Gallegos, the retiring head of the insurance supervision division of the Cayman Islands Monetary Authority. Ms. Gallegos will be succeeded by Morag Nicol, deputy head of the insurance supervision division of CIMA.

In her final speech as insurance regulator, Ms. Gallegos said the domicile remains strong despite predictions that the growth of onshore captive domiciles in the United States would impact offshore captive development. The domicile has licensed 51 new captives so far this year, just one off of last year's pace, Ms. Gallegos said. "We're quite pleased about that," she said.

All of the new captives have U.S.-based parents except for three that are based in Canada, Bermuda and Switzerland, she said. Twenty of the new captives are related to the health care sector, demonstrating the domicile's continued dominance in the health care captive area, she noted.

Cayman now has a total of 735 captives with premiums of more than $7 billion and assets of more than $29 billion, Ms. Gallegos said.