Life reinsurance: a boost for Bermuda

Bermuda’s life reinsurance market has undergone a year of continued growth, with a steady increase in company registrations, driving vital job growth in the jurisdiction.

According to figures collected by Bermuda’s Business Development Agency (BDA) the number of Bermuda-based companies in the sector, which provides global coverage of life, annuity and pension products, more than doubled in 2018, compared to the previous year.

The BDA quotes figures released by the Bermuda Monetary Authority (BMA) that said that a total of 15 new long-term companies were licensed in Bermuda in 2018, compared to six registrations in 2017—marking what the BDA says was the greatest year-on-year growth across all insurance sectors.

Bermuda International Long Term Insurers and Reinsurers (BILTIR) is also positive about the growth in the market. BILTIR was founded in 2011 with five members, and has now grown to 43 re/insurance company members and 16 service provider members.

According to BILTIR’s latest factsheet, in 2014 the Bermuda life assets owned by insurers totalled $150 billion (Figure 1). In 2015 that increased to $196 billion and in 2016 to $288 billion.

Looking at assets by insurance sector, in 2014 life was third, behind captives and property & casualty (P&C). In 2015 life assets were slightly ahead of captive assets, but still behind P&C, but by 2016, life assets had overtaken the other two sectors (Figure 2).

America calling
In March 2019 the BDA partnered with Bermuda’s life and annuity re/insurance sector to promote a strong presence at the industry’s largest US conference.

The BDA teamed up for the first time with BILTIR to lead an industry delegation to the 13th annual ReFocus event. Co-hosted by the American Council of Life Insurers (ACLI) and the Society of Actuaries (SOA), the conference in Las Vegas attracts more than 700 attendees annually and features senior industry speakers, topical panels, and networking opportunities for decision-makers across the global long-term re/insurance sector.

“With Bermuda’s leadership position within this industry, it is paramount to have a strong presence at ReFocus to continue raising our profile and attracting further interest from prospective clients,” said Jereme Ramsay, business development manager for risk solutions at the BDA, before the conference in March.

“The content and audience offer a natural fit for Bermuda-based carriers and service providers, and we’re looking forward to attending and participating in that dialogue.”

Bermuda stands tall
Some 50 Bermuda-based industry experts and service providers, including BILTIR members, attended the 2019 ReFocus conference, with the BDA and BILTIR co-hosting a “Bermuda Lounge” throughout the event and a Bermuda networking lunch.

Senior executives from insurance groups with a Bermuda presence, including Legal & General, Global Atlantic, Athene Re, Wilton Re, and Hannover Re, were featured on the programme—highlighting the growing importance of Bermuda in the life insurance marketplace.

Bill Wheeler, president of Athene Holding, was a panellist in a session on mergers and acquisitions (M&A), and Thomas Olunloyo, CEO of L&G Re, moderated a discussion on the UK’s departure from the EU the following day.

Other hot industry topics on the ReFocus 2019 agenda included global trade barriers, the opioid crisis, artificial intelligence, blockchain and insurtech, uninsured gaps, and the impact of M&A trends.

The heightened Bermuda presence at this year’s ReFocus event also aimed to highlight BILTIR’s annual life and annuity conference—scheduled for September 19, 2019 at the Fairmont Southampton. Last year, the BILTIR event attracted a record 300 attendees.

“Bermuda is an ideal venue for insurers from the East Coast of the US and the UK to gather and learn more about the strength of our jurisdiction,” said Sylvia Oliveira, CEO of Wilton Re Bermuda and a BILTIR director.

The BDA added that long-term insurance and reinsurance, which help protect consumers from underfunded retirement years and provide care for unsupported dependents, is a growing market globally. In Bermuda, the sector—comprising a diverse group of companies with more than $300 billion in total assets—is expanding, with a total of 11 new life re/insurers licensed by November 2018, with more newcomers expected in statistics released for December and Q1 2019.

The capital of the world for risk—with good reason
According to John Wight, group chairman and chief executive officer of BF&M, Bermuda is sometimes referred to as “the capital of the world for risk” for good reason. Its growing prominence in the life sector—which now holds more assets than either captives or P&C—is proof of this.

Wight says this is well earned for many reasons. One of the top reasons cited by businesses choosing to domicile there is Bermuda’s robust but flexible regulation by the BMA. Bermuda enjoys both Solvency II equivalence and National Association of Insurance Commissioners qualification.

“This means the Island’s re/insurance market operates in a legal and regulatory environment that is on par with those in Europe and the US. This has put Bermuda ahead of many of its competitor jurisdictions and reaffirmed its position as a dynamic insurance market with highly credible regulation.

“Another reason cited by investors to incorporate life re/insurance companies in Bermuda is the straightforward and streamlined licensing process, which supports speed to market,” says Wight.

“Further, while maintaining the necessary regulatory principles including policyholder protection, proportionality and transparency, Bermuda continues to be recognised as a leader in innovation through the creation of new, leading-edge structures.”

As a result of this, Wight claims, Bermuda is perhaps best known for its global reputation as a domicile for captives and P&C re/insurers, adding that in 2019, life re/insurance constitutes a significant segment of Bermuda’s overall market.

The life sector has overtaken the captive and P&C sectors in assets. In 2018, the number of new life insurance formations in Bermuda more than doubled over the prior year.

“We continue to see strong interest in offshore products issued by Bermuda reinsurers, which translates into a high level of activity by large US reinsurers and investment houses seeking to establish new long-term re/insurance facilities in Bermuda,” Wight concludes. “Bermuda’s re/insurance sector continues to move from strength to strength.”