C.E.O. of the Bermuda Business Development Agency, Ross Webber reflects on the first year of operation. (Photograph by Blaire Simmons)

BDA CEO Blog: Solvency II and Bermuda

C.E.O. of the Bermuda Business Development Agency, Ross Webber reflects on the first year of operation. (Photograph by Blaire Simmons) ORIGINAL BLOG HERE

Bermuda’s value as a world-class international financial centre received an immense boost a fortnight ago. In a much-anticipated announcement, the European Commission awarded our jurisdiction full equivalence under Europe’s Solvency II insurance regulatory regime, which comes into force January 1, 2016.

This impressive stamp of approval, now under final review by the European Parliament, marks the successful result of a six-year campaign for Bermuda. We applaud our colleagues at the Bermuda Monetary Authority (BMA), Bermuda government, and industry associations such as the Association of Bermuda Insurers & Reinsurers (ABIR), the Bermuda Insurance Management Association (BIMA) and the Bermuda International Long-Term Insurers & Reinsurers (BILTIR). All have worked diligently—in Bermuda and Brussels—to ensure our jurisdiction was among the first of non-EU markets to receive such an endorsement. Only Bermuda and Switzerland currently hold that distinction.

Insurance Linked

The alternative twelve days of Christmas


A seasonal round-up of the big stories of 2015. Happy holidays.

Atlantic_hurricane_season_summary_mapTwelve tropical depressions

As predicted by Tim Hall and others, Atlantic storm activity was slightly below the long term average. None of the storms were sufficiently bad to affect the reinsurance market. The relatively low level of property damage included over $500m of damage from Erika in Dominica, and $60m of damage from Joaquin in the Bahamas and Bermuda.

The twelve were: Hurricanes Danny, Fred, Joaquin and Kate; Tropical Storms Ana, Bill, Claudette,  Erika,  Grace, Henri, and Ida plus Tropical Depression Nine.


Bermuda insurers should be goodwill ambassadors: BDA


Bermuda insurers should act as goodwill ambassadors to help promote the region internationally as a respected blue-chip jurisdiction, according to Ross Webber, chief executive officer (CEO) of the  Bermuda Business Development Agency (BDA).

Webber made his comment in a speech to attendees of last week’s Bermuda Insurance Market Conference (BIMC).

“I’m of the opinion that as a jurisdiction, we can achieve far more in our overseas business outreach as Team Bermuda than we can as individual companies or separate vested interests,” said Webber.


ILS & cat bonds can be a socially responsible investment: Mercer

artemisORIGINAL PUBLICATION HEREILS and catastrophe bonds as responsible investments

Insurance-linked securities (ILS) and catastrophe bonds as an asset class can increasingly provide  sophisticated investors with a new type of responsible investment, creating another attractive angle to the investment case for ILS, according to Mercer.

ILS and insurance or reinsurance linked investment instruments, such as catastrophe bonds, ILS funds and sidecars, tend to attract institutional investors based on their stable return profile over the longer-term, the diversification aspects and the low correlation between many insurance and reinsurance risks, particularly catastrophe and weather risks, with broader financial markets.


2016 Atlantic hurricane forecasts suggest possible return to average


The early forecasts and outlooks for the 2016 Atlantic tropical storm and hurricane season seem to suggest a possible return towards more average conditions, with a 97% landfall probability for the U.S. coastline, as the current El Niño impacts may wane.

For the insurance and reinsurance industry, the insurance-linked securities (ILS) fund managers and their investors, as well as investors in catastrophe bonds, the outlook for the Atlantic hurricane season is one of the most important forecasts of the year.

At this early stage, the outlooks and forecasts come with little certainty. With a strong El Niño in the Pacific currently, which some climate researchers and meteorologists believe to have peaked, the question now is how will it influence the Atlantic tropics in 2016 and how quickly will conditions shift to La Niña?


People are starting to see insurance as an asset class: Nelson, Lloyd’s

artemisORIGINAL PUBLICATION HERELloyd's of London building

What a difference two years can make. In September 2013 John Nelson, Chairman of the Lloyd’s of London insurance and reinsurance market, had warned that mismanagement of third-party capital in re/insurance could lead to “systemic” issues in the market.

Yesterday, Nelson was quoted in the Financial Times discussing the launch of the newly planned Lloyd’s market loss and performance Index, acknowledging that insurance risk is becoming an asset class and extolling the virtues of this new or alternative reinsurance capital.

In the past Nelson has been cautious on alternative capital, the growth of insurance-linked securities (ILS) and the potential for ILS having a role in the Lloyd’s market. His commentary clearly shows that he and Lloyd’s saw the opportunity to harness ILS and the capital markets, but that they wanted to approach it in a controlled manner, so as not to introduce undue risks to the market.


ILS continues to attract investors, will further pressure reinsurers: EIOPA


Insurance-linked securities (ILS) and reinsurance linked investments are continuing to attract capital market investors such as pension funds, resulting in continued growth of alternative capital and further pressure for reinsurers to face, according to regulator EIOPA.

The EU insurance and reinsurance industry watchdog, the European Insurance and Occupational Pensions Authority (EIOPA), has said before that it sees the growth of alternative capital as a “key risk” for traditional reinsurers.

In its latest financial stability report which was published on the 9th December, EIOPA highlights that while growth of alternative capital in reinsurance has slowed in 2015, in response to the reduction in available rates, it does continue to grow and as a result reinsurers will remain pressured by it.

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BSX chief Wojciechowski on the future of ILS


Global Reinsurance interviews stock exchange chief

How big a role has the Bermuda Stock Exchange (BSX) played in the boom of ILS?

We have about 142 listed ILS vehicles right now on the BSX, they’re about $17.8bn, which equates to about of the total markets right now being quoted to be $24bn, and we’ve got 70% of the global issuances listed on the exchange. They’re coming from all over, they’re not just Bermudian companies, they’re Irish, and they are from other places as well. We saw that as a real opportunity because Bermuda is the third largest reinsurance industry in the world, it’s been operating in this space for decades. Bermuda insurers have been servicing global clients for many many years, and because of its, the infrastructure that’s developed in the country and the base level of experience there, Bermuda has become very effective in being a driver of innovation for new products.

In 2008 things changed, we started to watch the kind of structural changes happening in the market, including how capital flowed into the market. Capital was flowing into vehicles that were providing risk transfer for insurance companies – it was intuitive for us that in order for the market to continue to drive and create and innovate, capital markets would have to become involved as well.

The investment side of the market like the investment profile of ILS as a risk diversifier, and there is a lot more comfort in global capital markets. While those actually involved in creating and driving the product are looking at ways to continue to thrive they’re business, we as infrastructure providers are looking at ways to bring further support – and investors.


New business events headed for Bermuda in 2016: BDA

Several major international business events are headed to the Bermuda next year, including two inaugural conferences that could attract hundreds of corporate delegates to Bermuda for the first time, according to the Bermuda Business Development Agency (BDA).
The organisation announced that the Legal Week Private Client Forum Americas 2016 event will be held at the island’s Rosewood Tucker’s Point Resort in February and the BDA is now finalising details with Canada’s Radius Financial Education to stage the World Alternative Investment Summit (WAIS) 2016 in Bermuda later in the year also.