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Bermuda continues its leadership of global captive domiciles, but it has been a difficult few years for the sector, faced as it has been by the protracted soft cycle in commercial insurance and reinsurance. Formations have been muted in Bermuda and beyond its shores, but the pipeline for new formations does show promise. Much will depend upon whether events in the first five months of 2011—Australia, Japan, New Zealand and, most recently, the US—will build to a turn, with a busy US hurricane season potentially acting as a final upward driver.
Should pricing harden in the commercial sector, a re-examination of captive entities as an alternative to the commercial arena may well be in the offing for major global corporates and, increasingly, by more mid-sized firms exploring the potential of captive vehicles. Should they do so, Bermuda will find itself well placed to exploit any rise in interest, with its world-beating one-stop shop for captive insurance and reinsurance and regulatory excellence—exemplified by its decision to opt for Solvency II equivalence—likely to attract yet more captives to what is an already impressive bench.
Addressing the concerns of the industry and prospects for growth, Tom McMahon of the Bermuda Insurance Management Association outlines how 2011 is faring for Bermuda’s captive industry in ‘Keeping time with the regulatory beat’; whilst Bermuda’s position as the number one global jurisdiction for captives, and the reasons behind its success, are examined in ‘Still top dog’.
With Bermuda opting for equivalence, Solvency II and its implications for the Island’s captive sector are explored in ‘Striking the right balance’. Further regulatory oversight is imminent with the introduction of the Bermuda Monetary Authority’s (BMA) new code of conduct, and in ‘An agreement of principles’, KPMG addresses the nature of, and responses to, the new code. Meanwhile, Bermuda is awaiting the ratification of a new tax information exchange agreement with Canada, the implications of which are addressed in ‘Due south’.
Technical insights are provided by HSBC and Wells Fargo. ‘In Capturing growth in emerging markets’, HSBC addresses the investment potential of emerging economies and how captives can look to benefit from such prospects; whilst Wells Fargo outlines a debate of the collateral alternatives open to captives in ‘Decisions, decisions’.
It would seem that “the times they are a’changin”—to quote a certain Mr. Dylan—and should a turn materialise, Bermuda and its captive industry will be ideally placed to take advantage of developments and further build upon existing captive success.
View the 2011 Issue Here
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