Bermuda grows re/insurance registrations in H1, but SPI’s down slightly

According to the latest information from the Bermuda Monetary Authority (BMA) registrations of insurance and reinsurance entities on the island increase during the first-half of 2014, compared to a year earlier.

After such a period of rapid growth in the catastrophe bond and insurance-linked securities (ILS) market through 2013 and into 2014, it is no surprise that SPI registrations have slowed a little. It is not a sign of a slow down in market interest, in fact with record numbers of cat bonds issued in 2014 and almost all being domiciled in Bermuda, the island has actually grown its share of the market even further.

Rather we have now reached a stage in the market’s development where there are so many SPI’s in effect and available to re-use that new registrations are bound to slow a little, that is until the next growth spurt for the ILS space.

In total, the BMA registered 36 new insurers during the first half of 2014, which is a 6% increase from the 34 firms registered during the same period a year earlier.

New registrations inclue seven new captives, eight commercial insurers, five Long-Term (life) insurers and 16 Special Purpose Insurers (SPIs). This compares to nine new captives, two commercial insurers, three Long-Term firms and 20 SPIs registered during the first half of 2013. The BMA also registered eight intermediaries, which is the same amount as last year.

Shelby Weldon, Director of Licensing & Authorisations at the BMA, said the latest data showed that “Bermuda’s reputation as the Silicon Valley of the risk industry is well deserved.”

“On the insurance side, we have seen a number of innovative new vehicles being formed,” commented Mr. Weldon. “In March 2014, the first ever African catastrophe insurance pool, African Risk Capacity Insurance Company Limited was launched with much fanfare. Bermuda beat out all other domiciles to be the home of this groundbreaking entity which will help African Union member states cope with the impact of extreme weather events and protect food insecure populations.”

“It is good to see growth in the commercial and Long-Term sectors,” Weldon explained. “It is not surprising to see SPI registration numbers declining slightly. The Authority is aware of a number of SPIs that are currently registered but which still have to activate because participants are waiting to enter the market at the right time.”

This is likely to be a factor this year, that some potential issuers of cat bonds or users of SPI’s for other purposes, may have registered their vehicle but not yet deployed it due to market conditions. Bermuda is likely to see further growth as and when cat bond issuance comes back after the wind season and it is likely to see a number of new deals towards the end of this year.

Also of note, the BMA said that it expects to publish a consultation paper regarding Europe’s Alternative Investment Fund Managers (AIFM) initiative by the last quarter of the year. With other domiciles looking to put measures in place to make it easier for investment funds to comply with AIFM, Bermuda’s steps in this area will be welcomed by the ILS fund management industry.