Bermuda remains the preferred jurisdiction for catastrophe bond issuance, although there is now more choice than ever for sponsors with new jurisdictions, particularly in Asia, increasingly looking to grow their market share .
This consensus emerged from the Bermuda-focused Sixth Artemis Insurance-Linked Securities (ILS) Executive Roundtable, which was held virtually for the second year in a row due to restrictions related to the ongoing pandemic.
Artemis owner and editor Steve Evans summed up: “Bermuda has attracted a significant amount of start-up capital in 2020 ahead of the expected strengthening of the reinsurance market.”
He said executives and experts in the ILS and reinsurance industry agreed that new investors and seed capital should choose Bermuda.
Mr Evans summarized: “Participants highlighted Bermuda’s strong risk transfer infrastructure, adaptive regulatory environment and ability to innovate, and explored what the island needs to do to ensure it continues to be successful. gain new business.
“While the pandemic has grabbed the headlines for the past 18 months or so, climate change remains. And as the conversation intensified, the universe of sustainable and responsible investing expanded and is now often debated in the ILS space, and our roundtable was no exception.
“Along with growing ESG demand and high demand from more traditional investors, the longevity of current market conditions has been called into question, as has the potential for capital entrapment of uncertainty from related business disruptions. at Covid. “
Meanwhile, Ocorian Executive Director Sherman Taylor said: “Bermuda successfully competes in providing high quality, low friction service, while maintaining the price and speed to market of the world. highly competitive island.
“This is how Bermuda stands out in a crowded global insurance industry. Ultimately, it is Bermuda’s value proposition that will keep them in their position of first home for ILS.
Tom Johansmeyer, Director of PCS, said: “Bermuda has many more advantages than just legal or regulatory advantages. I chose Bermuda because it lives up to its reputation as the ILS community’s hub for collaboration and innovation.
“PCS’s suite of new solutions – which dates back to our first steps in aggregating leased line losses in 2017 – came from Bermuda support.
“The Bermuda market helped us develop our leased line methodology (first for PCS Global Marine and Energy), provided our baseline data for significant onshore risk losses and was instrumental in creating loss reports for Japan and cyberspace. And Bermuda trades – the rest of the world follows.
He said Bermuda has a history of stabilizing influence during times of market stress. And the new capital deployed to the island over the past six months was a sign of increased investor confidence.
He added: “In the meantime, we can expect further consolidation and changes in the global insurance landscape. Bermuda’s deep insurance roots, rich talent pool and commitment to innovation provide a sense of investor confidence, and this is one of the main reasons newcos and fresh capital continue. to turn to jurisdiction.
Appleby Bermuda partner Brad Adderley said Bermuda was the only one to benefit from Solvency II equivalence, NAIC approval and a reinsurance market where transactions can be made.
Vantage Chief Financial Officer Aurora Swithenbank said Bermuda was an easy choice to start her business.
She said: “The pool of underwriting and operating talent on the island is significant. And Bermuda provides that platform in a strong and coherent legal framework supporting capital formation.
“This is the reason why investors are comfortable with the jurisdiction, having done their due diligence and having had good historical experiences in Bermuda.
“Bermuda remains the premier jurisdiction for newcos and the hub for ILS capital formation, and on a personal note, I am delighted to call Bermuda my new home.”
Lancashire Capital Management CEO Darren Redhead said: “For us at Kinesis / LCM Bermuda provides infrastructure / resources to service providers and most importantly a willingness / understanding of regulators to help you adapt to changing market conditions.
Horseshoe Managing Director Kathleen Faries said: “Bermuda is known for being able to balance its robust regulatory framework with its agility and commercial character. This is a very difficult balance especially when you are also a Solvency II scheme.
“Additionally, many other jurisdictions vying for this startup business seem unable to compete with the level of expertise, experience and ‘plumbing’ that Bermuda has amassed over the years. “
She said there was plenty of room for securitization of risk innovation and that Bermuda could, and should, lead this innovation by leveraging the digital asset regulatory framework already adopted in the jurisdiction (DABA). .
Richard Lowther, Managing Partner of Integral ILS, noted that the key to ensuring Bermuda remains the home of choice for all forms of ILS is cost competitiveness, speed to market and attractiveness and retention of top talent.
Hiscox ILS portfolio manager Aaron Garcia stressed: “Investor capital should look to Bermuda as it is a proven center of excellence for risk taking.
“Over the past decade, the island has consistently maintained its global reputation as a ‘global venture capital’ due to the strong leadership of Bermuda’s insurers, reinsurers and asset managers, and their ability to work hand in hand. in hand with the Bermuda government and regulators. “
Steve Evans of Artemis.bm
Aaron Garcia Ehrhardt, CFA, Portfolio Manager, Hiscox ILS
Kathleen Faries, CEO, Horseshoe
Darren Redhead, CEO, Lancashire Capital Management
Aurora Swithenbank, Chief Financial Officer, Vantage
Brad Adderley, Partner at Appleby, Bermuda
Sherman Taylor, Executive Director, Ocorian
Tom Johansmeyer, Head of PCS
Artemis Bermuda ILS Executive Roundtable 2021