'We'll protect Bermuda's turf'

The Government views all competition seriously and the Cayman’s announcement is no exception.

However, based on our current understanding of the Cayman’s proposal, and, provided that we remain focused on our strategies of collaboration with our business partners to enhance our enviable reputation by: strengthening our relationships with the European Union, UK and US jurisdictions; strengthening our regulations to satisfy the global regulatory agencies; and enacting business-friendly legislation, then it is unlikely that this initiative will represent a serious threat to Bermuda’s existing reinsurance market in the short term.

You may ask why we are so certain of our relationship with our reinsurance partners. The plans that have been announced by the Cayman Premier to develop a commercial reinsurance register make for interesting reading but they must be put into perspective.

First of all, this is not something that is going to happen overnight. There’s a great deal of infrastructure that will need to put in place in order to attract these companies.

Secondly, in addition to attracting the financial capital, the requisite human capital will need to be assembled to enable a viable reinsurance centre to be formed. While they have identified changes that they intend to make to their immigration legislation, it is unlikely that these alone will be sufficient to sustain a commercial reinsurance marketplace.

Third, the type of top-rated reinsurance entities that the Cayman Islands seems to want will be attracted less by a domicile’s favourable immigration arrangements than by its stability and reputation.

The Bermuda marketplace is known globally as a centre of excellence in the area of reinsurance underwriting. Advances in the technical pricing of risk; the creation of alternative forms of capital such as sidecars, regulatory innovation; and a series of other developments including strong sovereign ratings; have combined to make Bermuda one of the top three reinsurance centres of the world.

We are known as the risk capital of the world. Additionally, the credibility of our jurisdiction is reflected in the strength of its international relationships with those organisations that are shaping the future course of the reinsurance industry. [The IAIS, EIOPA, NAIC].

Thanks to connections that have been established by the BMA  over many years, Bermuda plays a leadership role in assisting with the development of the world’s risk industry.

Fourth, the issue of geography and accessibility is important to the larger reinsurers. Our strong relationship with the US has resulted in Bermuda being one of the few small islands that enjoys the benefit of US preclearance for travellers and private jets.

Fifth, the issue over which no one has control concerns the timing of external events. The critical drivers of growth have involved external events such as the terrorist attacks of 9/11, the hurricanes of 2005, which includes Katrina, or the tragedy of the earthquake and tsunami which struck Japan earlier this year. Speed to market in these situations is critical to the success of a startup reinsurer. The absence of such a catastrophe, combined with the recessionary climate and an already well-capitalised reinsurance market in which rates are generally seen as soft, will make the creation of a new reinsurance industry a major challenge, regardless of where it is located.

Lastly, stability and reputation is important, and credibility is a fundamental requirement. I was recently at the Overseas Territory Conference in the UK where Cayman signed a Framework for Fiscal Responsibility that was imposed by the UK Government... to adhere to standards that Bermuda has already on an independent basis taken.

Bermuda has never adopted an isolationist position — we favour collaboration and assistance, whether to help territories in need with technical support and in terms of disaster assistance.

However, we will fight aggressively and  continue to support  our market and we will continue to be nimble and innovative in protecting Bermuda’s turf and our national interests.

The Cayman Island has, once again, attempted to copy Bermuda’s model. We will continue to be the standard bearer and will not stray from our goal of continuing to make Bermuda the domicile of choice for credible, quality, substantive business.

SPECIAL REPORT / The Cayman Islands target Bermuda

• The Cayman factor
• 'We'll protect Bermuda's turf'
• Head-to-head comparison: Bermuda vs Cayman
• Does Cayman pose a formidable threat to Bermuda?
• Bermuda needs to be fast and aggressive