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Bermuda insurance sector achieves strong results in tough market conditions

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Bermuda’s insurance market has maintained its resilience, writing over USD100bn in premiums, according to The Bermuda Monetary Authority.

Shelby Weldon (pictured), director of licensing and authorisations at the Authority, says the market’s resilience is reflected in its consistent performance.
 
“Bermuda’s insurers continue to write significant volumes of premiums and hold substantial amounts of both assets and capital and surplus,” he says. “The volume of business being written here and the quality of our firms show that Bermuda remains one of the world’s premier insurance domiciles.”
 
Bermuda’s insurance market continued to manage the impacts of the global economy and market conditions effectively. The latest available statistics show that the market recorded similar year-on-year aggregate gross premiums written of USD107.6bn; net premiums written were USD94.6bn. Overall, the market recorded aggregate capital and surplus of USD168.7bn and held total assets of USD452.2bn. 
 
Gross premiums written by the commercial sector was USD87.3bn. Total assets for the commercial sector were USD366.9bn, while capital and surplus was USD126.6bn. The captive sector wrote USD20.3bn in gross premiums and reported total assets of USD85.3bn; reported capital and surplus for this sector was USD42.1bn.
 
Weldon says the market environment has become increasingly competitive, particularly in the captive space, but Bermuda clearly has the ability to attract quality business. 
 
“Bermuda remains the largest domicile in terms of active captives – a total of 856 as of the end of 2012,” Weldon says. “We are continuing to see new captive business choosing to locate here, based on our experience, both in terms of the practical regulatory environment and professional service providers on the ground catering to captives, as well as unparalleled access to a sophisticated reinsurance market.”
 
The Authority also recently announced that Bermuda will not be applying any Solvency II-type regime to the captive sector.
 
The jurisdiction also recorded a range of new insurer registrations – a total of 53 for 2012 – largely driven by 27 new Special Purpose Insurers (SPI). Bermuda is increasingly becoming a global centre for the creation, listing and servicing of Insurance Linked Securities (ILS) that are sponsored by SPIs. 
 
“Having put in place the regulatory framework for SPIs in 2009, we are pleased to see initial interest now translating into active business,” Weldon says. “The total volume of new ILS issued globally in 2012 was USD6.4bn with USD2.5bn, or 40 per cent, of this total being sponsored by Bermuda-registered SPIs. Overall, SPIs provide another alternative risk transfer option which builds upon Bermuda’s long-standing expertise in this area. The jurisdiction is committed to servicing this growing segment of the market.
 
“We are also pleased to see increased registrations in the long-term space. We registered nine new long-term firms in 2012, compared to three in 2011. This increase shows that Bermuda is still very much open for life insurance business. One of our priorities is to ensure this sector continues to benefit from proportionate regulation that remains workable for both the market and the regulator.
 
“In fact, that will continue to be the case for our regulation for the insurance sector overall,” he says. “Bermuda remains attractive due to our unique position of being able to service the full spectrum of insurance: from commercial insurers, to captives, to long-term firms. There is a collective commitment from the Authority, service providers, and the market to continue providing quality regulation and service standards to the insurance sector.” 

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