On the world stage: promoting brand Bermuda

Bermuda’s life sector appreciates the need to maintain its active engagement with other jurisdictions about the Island’s strengths as one of the largest and most sophisticated commercial re/insurance marketplaces in the world.

In step with that objective is the recent formation of a global advocacy committee (GAC) by Bermuda International Long Term Insurers and Reinsurers (BILTIR).

The committee will interact with regulators, governments, BILTIR members, clients, rating agencies, distributors, and advocacy groups to ensure Bermuda maintains its strong reputation as a competitive and leading international financial centre.

BILTIR was formed in 2011 and its members now represent 68 annuity and life insurance and reinsurance businesses, as well as servicing companies. Many of its members operate in multiple jurisdictions already. Its mission, then and now, is to serve as a clear and consistent voice in advocating for the interests of Bermuda’s life and annuity sector.

Three of its four strategic goals concern Bermuda exclusively: local advocacy, learning and networking, and social impact. The fourth—international advocacy—is where the new committee comes in.

GAC’s chairman is John Hele, president and chief operating officer of Resolution Life Group Holdings, and a BILTIR board member.

“Bermuda’s life sector has a large local impact,” he said. “We have 600 Bermuda-based staff, 60 percent of whom are Bermudian or spouses of Bermudians. And we have an impact on the local economy of around $500 million a year—a very sizeable share of the $7 billion GDP of Bermuda.

“BILTIR members donate substantial amounts each year to local charities, as well as supporting tutoring programmes, scholarships and a summer internship programme which helped 26 young Bermudian students get into the long-term sector this year alone.”

He continued: “In our first 10 years, we at BILTIR have been focused locally and although our members might be focused internationally, as the international companies they are, we think there are misunderstandings around the world about Bermuda. We want to get out there together, through this new committee, and communicate the great story of the Island’s life sector.”

The committee was created when BILTIR’s board members decided the organisation needed to be more proactive about attitudes towards Bermuda, he said.

“We’re not planning to become international lobbyists, but we want to get our message out in a clear and consistent way to ensure we preserve and advance the global reputation of our industry and our jurisdiction.”

Balanced and diversified

The foundation of that great story is the sophistication of supervision through the Bermuda Monetary Authority (BMA).

“We have a prudent, sound, sensible regulator and, by bringing together different risks, we can diversify, which is much safer for the end policyholder,” Hele said.

“For example, at Resolution Re, we have different types of life insurance from the US and various cedants, but we also have reinsurance from Switzerland and Japan, and we’re actively working on some other areas around the world. We have a great diversification benefit in the life sector in Bermuda, similar to that seen in the Bermuda property and casualty industry for some time.”

Bermuda is one of only two jurisdictions (the other being Switzerland) with both EU Solvency II equivalence and US National Association of Insurance Commissioners (NAIC) accreditation, Hele noted. And, like the Swiss Financial Market Supervisory Authority, the BMA is a very active member of the International Association of Insurance Supervisors (IAIS).

“The BMA has the experience and a principles-based regulatory system that works well with the varied life risks and products from around the world,” Hele explained.

“The various regulatory regimes have developed with their own nuances for the types of products that are sold within their own regime: the US system has nuances that are different from those of the European system; the Australian system has differences from the Japanese one.

“The products vary in the different jurisdictions, and more so in life insurance than in P&C, because many of them deal with various local tax code and regulatory requirements. On the other hand, the Bermuda regime has long been working with all the different types of risks from around the world, and it has created a life regulatory framework that works for all.”

Misunderstandings

Such differences between the various jurisdictions can lead to misunderstandings and sometimes even misrepresentations of how Bermuda operates.

“There are concerns that we sometimes get grouped in with other offshore jurisdictions, but no other island insurance regulatory system is anywhere close to what we have in Bermuda for life insurance,” Hele said.

“Bermuda is sometimes grouped in with ‘not strong’ anti-money laundering issues, which is totally wrong and so far from the truth. The Bermuda banking system is extremely transparent and has very strong anti-money laundering requirements.”

Prior to joining Resolution Life, Hele was executive vice president and chief financial officer at MetLife. He has also held senior roles at Arch Capital Group, ING Groep, Worldinsure, Merrill Lynch and Crown Life—ie, in banking, P&C, and life.

During his time at Arch, he worked with the Association of Bermuda Insurers and Reinsurers (ABIR) on gaining Solvency II equivalence for Bermuda.

“We accompanied Bermuda delegates to Europe and met with various people there, who saw Bermuda as an island ‘someplace in the Caribbean’, when it isn’t even in the Caribbean,” Hele said.

“The Bermuda government and the BMA did a great deal of work to get to a level that we could be deemed to be Solvency II equivalent. We’re very proud of them because we’re here now thanks to all that work,” he added.

Asked what might be drivers of the misrepresentation of Bermuda, Hele said many factors are at play.

“There are different motivations from different people, but we’ve found that having a clear and consistent message about our strong regulatory regime is what we have to get out, and to continually explain,” he said.

One voice

While at ING Groep, during the early days of Solvency II in Europe, Hele learned the benefit of having a consistent message with regulators through the Chief Risk Officers Forum.

“A message is more powerful when companies band together,” he said.

“The other benefit was that, by benchmarking what everyone was doing, we found we were all doing almost same thing, but sometimes with variance in language. When we spoke individually to the regulators, they could sometimes get confused over what we were saying, so for BILTIR’s GAC, we’ve formed four working groups.”

The working groups will cover the US; Europe and the UK; Asia; and Global. Each will work towards ensuring BILTIR’s views are clear to the BMA, so that the regulator can focus on the core issues for Bermuda’s life sector when it meets with other regulatory authorities at IAIS and other international meetings.

“We will work hand-in-hand with all the constituents in each of the respective areas of our working groups—the regulators, the rating agencies, the legislators—to ensure that our core messages come up clearly, because we’re very proud of what Bermuda has to offer,” Hele said.

This will be no easy task and will require a lot of leg work by the working groups, he said.

“We’ve asked each of them to understand their situation, to hear what’s being said by all the different constituents and then come back to the committee for us to form our messages for each jurisdiction. It’s early to say what their work will entail but I do know, from experience, that you need to divide it up,” Hele said.

“In Asia—what’s going on in Hong Kong, Japan, South Korea and Taiwan—the questions might be different from what’s being said in the US or in Europe. We need to gather all that information and make sure it clearly fits within the frame of reference of each region.

“It’s about communicating what we have in a way that directly responds to questions from each of the regulators.”

As to the committee’s shelf-life, Hele said: “There’ll be an initial push to get the message out, but if you ever think you’ve communicated enough, you haven’t, and you need to say it over and over again.”

He added: “We’ll be at this for some time. It is one of the four pillars of what BILTIR was formed to do. We’re still a young association, and growing, and it is part of our natural evolution that we’re focused now on this pillar.”

Measuring success

Hele listed the four main aims of the committee.

“First, a proactive engagement on international issues for Bermuda to promote the strength, safety and vitality of our sector because we believe our sector prioritises policyholder protection above all else. That’s one of the key messages we want to get out there.

“Second, we will broaden our engagement to include international regulators, governments, legislators, rating agencies, clients, distributors, and advocacy groups.

“A third key point is that we plan to work in partnership with the BMA but also with other groups in the Bermuda economy, including the ABIR and ABIC. We’ll be coordinating with them and other Bermuda business associations so the messaging is consistent.

“The fourth point is that we will work in partnership with BILTIR members to execute this mission, versus our going out and becoming direct lobbyists. We will be coming together to have good messaging that any individual BILTIR member can use when they meet with people around the world.”

The committee’s “scorecard” to measure its success will be how well it addresses the misunderstandings and myths about Bermuda that come up among regulators and others, Hele said.

“We’ll attend the big life industry events and see whether the Bermuda brand is being communicated and out there,” he said.

“Our individual members will be very good at measuring this when they attend the main meetings. For example, if you’re a company doing a lot of business in the US and attending NAIC meetings, you’ll see how well American regulators understand our message. We’ll ask for feedback from our members on how well our work as a committee is an education for them on how we maintain Solvency II equivalence, for example, and see reciprocal jurisdiction.

“That will be very important to us and we’ll work with the BMA to make sure that happens.”

Personal input

Hele said he was “pretty unusual” in having worked in banking, P&C and life.

“I know of a few others who’ve done that, and I can say it was rewarding to see the different perspectives from all the regulatory interactions I’ve had,” he said.

“The sectors are quite segregated and there are no longer many combined P&C and life companies, but when you’re dealing with regulators, including the BMA, you can see that they often look at both banking and insurance. So it’s important to communicate with them according to their terms of reference and to cut through the nuances between the two areas.

“My experience with Solvency II, when I was in Europe with ING Groep and dealing with the Dutch and European regulators, then with the BMA in helping it get Solvency II equivalence, and now in my current role as chair of BILTIR’s GAC—all of that is helpful in dealing with all the various views.

“We are a highly regulated business and we need to work with regulators everywhere to advance our mission. I’m already very proud of our committee and we’re only just getting going,” he concluded.