Cayman Update: Transfers of insurance business without approval by CIMA in breach of Section 31 of the Insurance Act, 2010 are void ab initio

On 17 May 2023, the Honourable Justice Sir Anthony Smellie KC held in Premier Assurance Group SPC Ltd. (in Official Liquidation) v Providence Insurance Company I.I (for and on behalf of Premier Assurance Segregated Portfolio Puerto Rico SAP) and others that a transfer of insurance business made in breach of the requirement to obtain approval from the Cayman Islands Monetary Authority ("CIMA") pursuant to Section 31 of the Insurance Act, 2010 (the "Insurance Act") was void ab initio and of no legal effect. The decision is momentous as it was the first time that the Grand Court has determined the legal effect of non-compliant transactions under Section 31 of the Insurance Act.

Premier Assurance Group SPC Ltd. (in Official Liquidation) (the "Company") was licensed to offer insurance products through one if its segregated portfolios, Premier Assurance Segregated Portfolio ("PASP"), to a global market (with the exception of the United States, the Cayman Islands and the British Virgin Islands) under the Insurance Act. Upon the winding up of the Company on 19 April 2021, the Company's insurance licence was revoked by CIMA.

Thereafter, the joint official liquidators (the "JOLs") of the Company sought various declarations that the purported transfer of 3,221 insurance policies issued by the Company (and referable to PASP) to an entity in Puerto Rico on or around 15 June 2020 (the "Purported Transfer") was void ab initio and of no legal effect. Such declarations were sought from the Grand Court on the basis that the Company's former directors did not seek or obtain CIMA's approval to effect the Purported Transfer in accordance with Section 31(1) of the Insurance Act, which provides that:

"A transfer or amalgamation of the whole, or any part, of the long term business of any insurer to another insurer shall only be effected in accordance with the approval of [CIMA]"


Whilst the Insurance Act does not explain the legal consequences of a breach of Section 31 of the Insurance Act, Walkers submitted (among other matters) that the Insurance Act should be construed as a whole taking into account its wider context, including the purpose of the legislative scheme to protect consumers of insurance products offered by insurers in or from within the Cayman Islands and the protection of the public interest in maintaining appropriate regulatory standards. In accepting Walkers' submissions, the Grand Court held at [116] that:

"When weighted in the balance of competing factors – especially the need for the insurance market to be regulated, the need to protect policy holders, the reputation of the jurisdiction as a safe and trustworthy environment, the presumption against absurd constructions or constructions that result in unworkable or impractical ends, I am compelled to the conclusion that the transfers in breach of Section 31 are void ab initio"

In reaching its decision, the Grand Court purposively construed the Insurance Act and recognised the important powers afforded to CIMA under the Insurance Act to oversee, control and regulate the insurance market and the protection of the interests of policyholders. 

Robert Levy KC and Rupert Bell (Partner) and Daisy Boulter (Senior Counsel) of Walkers appeared on behalf of the JOLs (Jeffrey Stower and Jason Robinson of Teneo).



Read the full article


Rupert BellPartnerT +1 345 914
Daisy BoulterSenior CounselT +1 345 914

Related Content