Bermuda news

While there are many ways to generate alpha for your investors in the insurance-linked securities (ILS) sector, it remains critical to manage investor expectations and avoid delivering unwanted surprises, speakers at Convergence 2023 in Bermuda said last week.

Speaking at the Convergence 2023 event in Bermuda yesterday, John Seo, Co-Founder & Managing Director at Fermat Capital Management, explained that there is significant investor interest in insurance-linked securities (ILS) right now, but when it comes to allocating, capital is slower moving these days.

At the Convergence 2023 conference in Bermuda today, speakers from insurance-linked securities (ILS) managers explained that the market remains smaller than is really desired and there is a need to continue efforts to make it more scalable, to meet the needs of larger investors.

Right now, there is an opportunity for institutional investors to harvest “the most pronounced risk-adjusted returns” from allocations to insurance-linked securities (ILS), according to Jo Stanton, Chair of ILS Bermuda and Head of Finance at Tangency Capital, speaking this morning at Convergence 2023.

Bermuda continues to be the world-leading insurance-linked securities (ILS) domicile, with the vast majority of the catastrophe bond market and a significant proportion of the rest of the ILS market, domiciled or serviced on the island, while its industry continues to drive forwards reinsurance and capital markets Convergence.

In August 2023, the Government of Bermuda announced its deliberation on the potential introduction of corporate income tax, pending a series of consultations.

Bermuda-headquartered AXIS Capital has teamed up with investor Stone Point to launch Monarch Point Re, a newly created collateralized reinsurer that has been capitalised by a more than $400 million raise and will operate as a kind of third-party capitalised casualty reinsurance sidecar structure, with a total return approach.

The “opportunity cost” of having collateral trapped from prior year events is, in the current higher reinsurance rate environment, increasingly in focus among the insurance-linked securities (ILS) fund manager community, Megan Green of PwC Bermuda told us in a recent video interview.

Two new examples of the collateralized insurer class of company have been set up in Bermuda, with Monarch Point Re (ISAC) Ltd. and Monarch Point Re (ISA 2023) Ltd. both registered by the regulator in May.

Captive insurance structures are still largely a self-insurance tool for their sponsors, but there is a market there for captives that might look to offload risks, or books of business, towards the end of their lives, David Gibbons of PwC Bermuda told us in a recent video interview.