Abstract
According to the 2007 Annual Report of the Bermuda Monetary Authority, total
premiums in 2006
amounted to BMD115.783mn. Of this, BMD 27,467mn was
generated by Long-Term Insurers writing
long-term or life business. The
remaining premiums were written by Class 1 insurers (single-parent pure
captives), Class 2 insurers (multi-owner pure captives and captives –
whether single- or multi-owner –
deriving up to 20% of premiums from
unrelated risks), Class 3 insurers (basically insurers and reinsurers
deriving all their business from unrelated risks, and captives deriving over
20% of premiums from
unrelated risks – including Rent-A-Captives)
and Class 4 insurers (insurers and reinsurers capitalised at at
least
BMD100mn and underwriting excess liability and/or property catastrophe
reinsurance risks).
According to Swiss Re' s sigma research, gross non-life
premiums rose by 8.1% in calendar 2006.
Bermuda Re-insurance magazine
commented on a Standard & Poors (S&P) ratings review of
Bermuda’s
leading reinsurers. It offered this assessment ‘The first nine months of
2008 combined a
sharply increased level of insured losses over 2007, the
sharp decline in equity values that ran right into
the September
month-end, and significant impairment in the value of investments in the
equities and
paper of the failed and failing investment banks and other
financial institutions. As a result, many of the
Bermuda re-insurers will
report an underwriting and a net loss for the third quarter, but not at a rate
likely
to turn the full year into a loss position – barring a
systemic fourth-quarter collapse or a major
earthquake.’ Of course,
there was in fact a worldwide fourth quarter collapse in stock market
prices.
The key feature of Bermuda is a combination of strengths –
the lack of income tax, the first class
regulatory regime, the proximity
to North America and the development of a sufficiently large
community of
people with the requisite skills etc. – to give it a position that
appears unassailable. Not for
nothing does Bermuda account for 40% of US
property catastrophe coverage (among much else) and
service well over
1,000 captive insurers. (The actual number of captives is difficult to define
because
many of these insurers are cell companies that service several
different clients simultaneously through
Rent-A-Captive programmes.)
The main problem that the sector faces is a potential lack of suitably skilled
personnel. This is true for the
(often highly specialised) captive
insurance firms as well as the major (re)insurers
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