Bermuda was a ‘missing piece’ in its global reinsurance footprint: Beazley
Bermuda’s value to an established global reinsurer is not in recreating what it already has elsewhere. For Beazley, the opportunity lies in accessing different flows of business, adding to lines it already knows and opening areas that have not previously had a significant place within the group.
“It was ultimately one of the last major pieces of the jigsaw,” Richard Gray, head of third-party capital and general manager, Beazley Bermuda, told Bermuda:Re+ILS ahead of ILS Bermuda Convergence, on 12-14 October.
“We started out at Lloyd’s, then we built a US platform, a European platform and operations in Asia. In terms of the major flow of reinsurance business, Bermuda was a missing piece.”
What Beazley does with that platform is being shaped by a requirement that growth in Bermuda should add to, rather than displace, business elsewhere in the group. “It absolutely has to be accretive, so there’s no cannibalisation of existing business,” Gray said.
“Much of our property treaty business, for instance, tends to reflect what we’re already writing in London. In that case, it’s doing more of what we already do and already like. But there are opportunities here that we don’t do, or we do on a very small scale elsewhere. Mortgage, for example, is new for Beazley.
“We do some structured reinsurance on our European platform, but again, we have the opportunity to really grow that business here in Bermuda. So, it’s complementary, it’s accretive, and it’s about either capturing what we already do and doing more of or extending into lines we can’t access elsewhere.”
Following the flows
For a market built around bringing different forms of risk and capital together, access to business remains central to Bermuda’s appeal. Gray puts that at the top of the list of reasons Beazley chose the island.
“Bermuda’s appeal, first of all, is its flows,” he said. “Bermuda is an absolutely critical part of the global reinsurance network, so having access to those flows is critical.”
The depth of the local workforce and the regulatory environment were also factors. “There’s a really strong talent pool here, which is important from our perspective, and what I would describe as a tough, but fair, regulator,” Gray said. “A regulator that’s very robust, but also there to be helpful. It’s a combination of all of those things really: flows, talent and the regulatory environment.”
Those attributes become particularly relevant when a platform is being used to move into business that requires capabilities beyond those already established elsewhere in a group.
Beazley’s move into mortgage provides one example. It has created a separate specialist team for the line and has already written business, with scope to deploy more capital as the portfolio develops.
“Mortgage is a relatively new line for us. It’s an area that we think is attractive. It’s something we’ve looked at for a while and Bermuda seemed to us to be the best way to capture that market,” Gray said.
This line brings an exposure with different characteristics from much of its existing portfolio: “From a broader Beazley perspective, obviously it’s a diversifying line that’s largely uncorrelated to other risks.”
A broader role for Bermuda
In addition to offering broader scope for growth in new and existing lines, the island also gives Beazley another balance sheet through which to participate in the market.
Its third-party capital activities add another element, although Gray views that as a separate part of the group’s toolkit rather than the rationale for the Bermuda insurance platform itself.
For the wider market gathering at Convergence, Beazley’s experience points to a role for Bermuda that is broader than providing another source of capacity. The combination Gray identifies – business flows, specialist talent and the regulatory framework – allows the island to serve as a place from which companies can both extend established portfolios and develop businesses that sit outside their traditional footprint.
Gray expects that role to remain relevant across the P&C market. “A combination of legal, regulatory and geographic advantages gives it some significant strengths across pretty much all lines of business,” he said.
“Across the entire P&C spectrum, Bermuda’s got a very important part to play for Beazley going forward.”
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