Keeping ahead of the pack
Wilton Re Bermuda started writing business in 2005, as an offshoot of its larger parent Wilton Re. Based in Hamilton, it’s gone on to become an increasingly valuable part of the parent company.
Chief executive officer Sylvia Oliveira joined Wilton Re five years ago when the previous CEO of the company passed away unexpectedly. At the time she was working for ACE (now Chubb) and says she applied for the vacant position because she regarded it as a challenge; she was thrilled when she was successful in obtaining the position.
“In terms of my plans for the company, Wilton Re Bermuda is a part of a larger group. I’m focused on the measured and profitable growth of Wilton Re Bermuda and Wilton Re as a whole. I strive to seek opportunities for growth, whether in support of my Wilton Re affiliates or working directly with a third party, to create structurally efficient solutions for our clients,” Oliveira says.
She argues that Bermuda’s location is perfect for the company—between the US and Europe, where both jurisdictions have strong connections to the Island.
“There’s also a high concentration of intellectual capital, in terms of the industry, creating an environment that stimulates new structures and creative growth,” she says.
“Bermuda has demonstrated the strength of its capital regime through obtaining both NAIC qualification and Solvency II equivalence. A well-respected regulator is an important strength and serves as a jurisdictional attraction for insurers and reinsurers who are focused on protecting policyholder benefits.”
Wilton Re’s focus is the US life insurance market where the company provides risk capital and related services including mergers and acquisitions (M&A) and in force acquisitions, traditional reinsurance, and longevity risk management.
A dual approach
Wilton Re Bermuda operates through two business segments. The first is In Force Solutions, in which, according to Oliveira, Wilton Re is an industry leader for M&A services and in force solutions. This part of the company provides clients with proven methods for achieving operational and expense efficiencies and enhanced capital management. It offers a combination of risk transfer and comprehensive administration services for the complete exit of a particular portfolio or business or to support the continuing operations.
The other segment is New Business Solutions, which provides traditional reinsurance to the US life insurance market with a specialisation in simplified issue products. Oliveira explains that Wilton Re offers reinsurance solutions for yearly renewal term, coinsurance and modified coinsurance for a wide range of traditional life and annuity products.
“One of the biggest challenges we’ve faced has been posed by Solvency II and the push by the Bermuda Monetary Authority (BMA) to obtain Solvency II equivalence,” she says.
“The magnitude and the multitude of changes to Bermuda’s capital and financial reporting requirements have been a major challenge, not just for the company, but for the entire commercial insurance industry on the Island.
“US tax reform could also present a major challenge,” she adds, going on to say that the company was watching recent developments in the US very carefully, due to the arrival of the Trump administration and, in particular, a possible change in the form of a border adjustment tax.
Looking at the big picture, Oliveira stresses that continued low interest rates is an issue that the life insurance industry is watching closely. The assets backing long-dated life insurance liabilities will often mature before the cash is needed to pay policyholders, so the assets must be reinvested.
If interest rates remain low or continue to fall, assets will have to be reinvested in lower yielding assets than anticipated in pricing. However, as this article was being written the US Federal Reserve raised US interest rates a quarter point, leaving room for some cautious optimism that investment rates might start to tick upwards.
Oliveira is also on the board of the Bermuda International Long Term Insurers and Reinsurers (BILTIR) group. BILTIR was founded in June 2011 by five founding member companies, with the aim of becoming a consistent and coherent voice for any concerns of the long-term re/insurance sector in Bermuda.
It now has 55 members and is committed to supporting the long-term re/insurance industry’s growth and success in Bermuda and globally.
For Oliveira, the current challenge for BILTIR is the BMA’s push for further strengthening of the capital regime. The proposed further capital regime changes have caused concern among BILTIR members since companies are still trying to interpret and implement the substantial changes that went into effect for year-end 2016.
“BILTIR has been working together with the BMA to understand the magnitude and timing of this second wave of major changes to the framework. BILTIR is grateful to the BMA for their continued accessibility and willingness to work with industry on these critical matters,” she says.
She adds that she is very pleased with the BMA’s efforts in recent years and grateful for the overall positive impact the changes have had for Bermuda’s insurance industry.
Finally, Oliveira mentions the upcoming snap election on Bermuda.
“The election will be a close one, and I am hopeful that, whatever the outcome, the two parties will be able to mend their differences and work together for the common benefit of Bermuda.”