Martin Laframboise: The Bermuda Monetary Authority (BMA) annual report has recently come out. It revealed that last year alone, there were 13 new licences granted in this sector, including eight new class E (assets greater than $500 million). So, Bermuda now has 148 licences as of 2021.

As an association which serves as a clear and consistent voice in advocating for the interests of Bermuda’s life and annuity sector, Bermuda International Long Term Insurers and Reinsurers (BILTIR) now has 68 members which have businesses in many jurisdictions.

Finally, there is the demographics side. There is a growing middle class, especially in Asia. We are seeing a fair bit of Asia business coming in because there is demand for life products and saving products in that region. Meanwhile, in the west, there is an ageing population seeking retirement solutions.

The BMA is very open to talking to new players. We are very accessible; we are able to engage, look at draft business plans and provide feedback quickly. Being accessible and responsive has played a key role there.

Brad Adderley: The life sector is a fascinating story. We talk about pillars of the economy; for me, this is a key pillar now. We always seem to lump insurance into one pillar but I like to break it down—life is a separate pillar. We had a number of new entrants last year, all with a hiring plan and all creating substance here.

Those jobs will be going from two to maybe five to maybe 50 positions eventually. That is in addition to the established companies hiring. That is interesting. How many large P&C businesses were formed last year? Not many big ones.

The life space is increasingly important to Bermuda. It has helped fill the gap. And what is really exciting is all the different companies are doing something different. They don’t all have the same business model. That means they have to talk to the BMA early about what they’re doing and how does it work within the BMA regulation. >>>

Ahwaz Chagani: I agree with what has been said. There were strategic considerations we gave a lot of thought to, and that’s why we established here in 2018. There are a few other considerations.

We have an affiliate company in the US that writes direct business. There are a lot of competitive pressures in the direct business. There are too many writers effectively selling similar products. You need a way to differentiate. One way you do that is to offer better returns to the policyholder—essentially through reinsurance. That has created an ecosystem of US-focused life insurers backed by an entity in Bermuda.

The other reason is that on the asset side everyone has their speciality, their niche. For third-party reinsurance, our company targets small to mid-sized blocks of business. Plus, we have the direct arm. But other firms might be targeting larger deals. Everybody’s offering something unique.

We have found that many direct writers seeking reinsurance are also seeking unique asset management capabilities to improve their competitive advantage. Capital has been cheap, particularly with the decline in interest rates since the Global Financial Crisis, which created an environment where it was easier to set up a shop in Bermuda. That is changing now but there has been a lot of product innovation in the US. Those are some other reasons driving the growth.

Adderley: The increase in interest rates may adversely affect new entrants to the market. Perhaps things will slow down, as people put the brakes on, or the second half of the year might be the same.

Mike White: I am more optimistic in terms of what the rising rate environment means. It’s natural that there’s going to be a bit of a slowdown because we are in a period of volatility. But if you look at the longer term, there are many problems to solve out there. There’s a lot of capital locked up in long-term business all over the world. Direct writers need capital to be able to recirculate into new, more innovative products.

The fundamentals are still very solid. Companies in Bermuda are offering innovative solutions. There’s always going to be a demand. Actually, rising rates might help. If you’re doing a deal in a low interest rate environment, you could be realising a big loss relative to book. Those deals might become a little bit more palatable with higher rates.