Bermuda is positioned to be a powerhouse
In the 30 years since the Association of Bermuda Insurers and Reinsurers was formed, Bermuda has evolved from a catastrophe risk hub into a diversified re/insurance centre and a specialty market of choice, says chief executive officer John Huff.
As we head into 2024, Bermuda’s insurance and reinsurance market has never been more relevant. Risk exposures are growing and new risks are emerging, from climate change and cyber risk to mortgage, political and terrorism risk. Bermuda’s capital and capacity have never been more coveted.
Bermuda has all the attributes to find solutions needed to narrow protection gaps that pose a threat to businesses, governments and communities. The market has evolved from a catastrophe risk hub into a diversified re/insurance centre and a specialty market of choice. In a world of proliferating risk, Bermuda is positioned to be a powerhouse.
In 2023 we had a chance to celebrate the journey that has led to this market becoming a global re/insurance heavyweight, as the Association of Bermuda Insurers and Reinsurers (ABIR) celebrated its 30th anniversary.
At the ABIR@30 Lunch Forum in September, guests—who included industry participants, regulators, politicians and dignitaries, from Bermuda, the UK and the US—illustrated the partnership and collaboration on which the market has been built and on which its future prosperity depends.
Hannah Gurga, chief executive officer of the Association of British Insurers (ABI), was one of the speakers at the event. This year ABIR signed a Memorandum of Understanding with the ABI to work together on matters of mutual interest, building on the already strong relationship between the two markets. Bermuda re/insurers represent about 44 percent of the capacity of the Lloyd’s of London Market and 32 percent of the reinsurance coverage of UK terrorism insurer Pool Re.
Mike Yaworsky, Florida Insurance Commissioner, and Justin O’Keefe, chair of the Reinsurance Association of America, also spoke at the event, describing the Bermuda market’s significant role in enabling an efficient and affordable insurance market in the US.
Bermuda re/insurers covered an estimated $13 billion, or about a quarter, of insured losses from Hurricane Ian in Florida in 2022, continuing a decades-long track record of claims-paying to help Americans recover from disasters, since the first wave of Bermuda catastrophe reinsurers incorporated on the Island 30 years ago in the wake of Hurricane Andrew.
Since 1997 Bermuda re/insurers have paid out more than a half a trillion US dollars to American consumers, businesses and communities, much of it to recover from a natural disaster such as a hurricane, tornado or wildfire.
More diversification
With the diversification of the market, Bermuda is creating value for the US in other ways. For example, Bermuda re/insurers provided more than 50 percent of the reinsurance capacity of US monoline mortgage guaranty insurers in 2020, according to annual financial statement filings approved by the National Association of Insurance Commissioners (NAIC), helping to enable the dream of home ownership for many Americans.
The Bermuda market today is truly global. ABIR’s member companies do business in more than 150 countries, protecting communities from disaster losses across the world. According to AM Best, Bermuda represents about 36 percent of the global reinsurance market by property and casualty net premiums earned.
“Global demand continues to grow for the protection and peace of mind that Bermuda’s re/insurers provide.” John Huff, ABIR
For example, Bermuda re/insurers’ share of reported liabilities was 37 percent from the European Windstorm Xynthia in 2010, 29 percent from the Japanese earthquake of 2011, and 20 percent from the Tianjin explosion in 2015.
Global demand continues to grow for the protection and peace of mind that Bermuda’s re/insurers provide. ABIR’s latest global underwriting report, comprising data from 24 of the 30 member companies, recorded a 13 percent year-over year increase in gross premium written to a total of $145 billion.
A central element of this world-class market is the oversight from an internationally recognised supervisor, the Bermuda Monetary Authority (BMA). As one of only two countries to have earned full Solvency II third country equivalence, the BMA’s regulatory standards are deemed to be on the same level as those of the EU. NAIC, the US standard-setting body, has granted the Island both qualified and reciprocal jurisdiction status. These recognitions allow Bermuda re/insurers efficient access to EU and US markets.
Adding value to Bermuda
Just as important as the Bermuda market’s value to the world is its value to Bermuda. Over the past 15 years alone, ABIR companies have contributed $12.84 billion to the Bermuda economy, according to a tally of annual member surveys. Re/insurers’ spending on employment, business services, real estate, construction, travel, entertainment and charity leads the Bermuda economy.
Through the taxes, fees and duties they pay, Bermuda re/insurers help to sustain the Bermuda government revenues that fund public services. With a majority of ABIR members expected to be in scope of Bermuda’s proposed Corporate Income Tax, due to take effect in 2025, the group’s economic value to the Island is set to grow further.
David Burt, the Premier of Bermuda, spoke at the ABIR@30 event of the huge growth in the local component of ABIR companies’ workforce. He said: “What was once a sector with single-digit Bermudian representation has now evolved into one where Bermudians, their spouses and permanent resident’s certificate holders make up 70 percent of the workforce.
“That is incredible growth and something that should be applauded, because it doesn’t happen by accident.”
Through their provision of education, training, mentorship and career development opportunities, the Island’s leading international re/insurers work to attract and develop Bermudian talent from diverse backgrounds. This year ABIR members provided a record 103 paid summer internships. ABIR partnered once more with Bermuda College and St. John’s University’s Maurice R. Greenberg School of Risk Management to sponsor a free, open-to-all insurance foundation course, which will be offered for a fourth time in 2024.
In 2022, ABIR members contributed over $815 million to the Bermuda economy—up 13 percent from 2021.
Service ecosystem
Over the decades, the city of Hamilton has witnessed the development of a unique re/insurance ecosystem in which carriers, brokers, risk modellers, data analysts, lawyers, accountants and auditors are situated within walking distance of each other.
“The combination of two Bermuda-born companies to create the world’s fifth-largest reinsurer speaks volumes about the Bermuda market’s growth.”
An innovative culture thrives in this environment, enabled by the collaboration between government, industry and regulator that enables unmatched “speed to market”, meaning new ideas can be tested, new products activated and risk capital deployed much more quickly than is possible elsewhere.
A milestone this year was RenaissanceRe’s acquisition of Validus Re and its subsidiaries from American International Group. The combination of two Bermuda-born companies to create the world’s fifth-largest reinsurer speaks volumes about the Bermuda market’s growth, evolution and continuing relevance.
This deal demonstrates that Bermuda continues to be the best place in the world from which to run a global re/insurance company. And with its entrepreneurial culture, exceptional talent and world-class regulator, Bermuda’s reputation as the place where capital and ideas meet to create solutions to managing the world’s emerging risks looks set only to grow.
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