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Bermuda Insurance Report 2009
Business Monitor International, March 2009, Pages: 69
BMI's Bermuda Insurance Report provides independent forecasts and competitive intelligence on Bermuda's insurance industry.
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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