ROUNDTABLE: LIFE AND LONG-TERM RE/INSURANCE
WHAT ARE THE MAIN FACTORS IMPACTING THE LIFE SECTOR AND BERMUDA?
“What’s unique to Bermuda is the talent developed over the year.”
Martin Laframboise
Martin Laframboise: Some key macro drivers, for example the aging population, impact the life sector globally; that’s not going to change, and Bermuda is benefiting from it. But what’s unique to Bermuda is the talent developed over the years in risk management, asset and liability management, capital, and liquidity management.
This combines with the robust and prudent regulatory foundations (full Solvency II equivalence, US reciprocal jurisdiction granted by NAIC) which is aligned with the long-term nature of the life sector. That’s why there’s a great success story in Bermuda.
Mike White: The regulation is a huge part of why any company comes here. The BMA has a great reputation internationally and it is a very pragmatic and commercial regulator. We also like its principles-based regulation. The regulatory system in Bermuda is solid, safe and recognised as equivalent to Solvency II.
I work for the reinsurance arm of the Resolution group and our role is to diversify risks from around the world. We have fixed, indexed annuities in the US, structured settlements in the US, some Swiss savings business, some Japanese savings business. >>>
“You can get off to a running start in terms of recruitment.”
Mike White
<<< In terms of assets we have everything from Swiss real estate to structured products in the US to regular corporate credit in three different countries.
It’s very rare to find a regulatory framework that is robust for all of those different types of risks. The reason it works is because it is principles-based. There is the issue of complexity; how do you take those principles and apply them?
That is why dialogue with the BMA is so important. We explain how we’re thinking about the risks, the reserving, the capital. I don’t think there are many regulators you’d be able to have that kind of discussion with.
Prior to 2018, a number of jurisdictions were considered, but the reputation of the regulator and the infrastructure, the fact that there was a thriving P&C industry here, direct writers, law firms and consultants—that won it.
There is also a pool of talent already working in the industry so you can get off to a running start in terms of recruitment. Even the time zone helps. If you’re doing business in the US and in Europe it is perfect.
“Everyone in the life space seems to be connected.”
Brad Adderley
Brad Adderley: You made a good point about the P&C marketplace helping the development of the life market. The snowball effect of US growth is such that life now is its own market in Bermuda, whereas maybe five years ago some bigger players were doing both. I find it interesting that the life reinsurers are doing deals with each other.
Everyone in the life space seems to be connected. You are also seeing people moving between companies. It is becoming a self-fulfilling prophecy—the snowball is getting bigger. More companies mean more people, and they attract more business.
With success comes scrutiny. Other jurisdictions out there are trying to eat our lunch. They don’t have the BMA, don’t have the regulations, don’t have the marketplace. But they are trying.
The bigger the market here, the more will come. The CEOs of new formations will be asking: “If everyone else is in Bermuda, why am I considering another jurisdiction?”.
The only hindrance for startups is talent. It’s something people struggle to find at all levels of the spectrum.
Laframboise: I agree. BILTIR membership is now made up of 50 or so re/insurance licensed companies, supported by our board of 15 directors representing major life companies in Bermuda. The association engage openly and closely with the regulator, which is part of one of our four core pillars to maintain close engagement with BMA (local advocacy). >>>
“One of the biggest advantages Bermuda has to offer is its associations.”
Helen Souza
<<< The other three are international advocacy; learning; and networking and social impact.
BILTIR members invest in developing Bermudians’ talent to facilitate them to join the life sector. All of that combined with the proximity of people here has helped BILTIR build the strong organisation it is today. Bermuda is an important re/insurance marketplace and BILTIR advocates for the interests of our members. Bermuda maintains some of the most recognised international standards and is there to continue maintain its commercial appeal.
Adderley: BILTIR is so important because of all the new rules and regulations and because everyone does so many different types of business. It’s very hard to have one-size-fits-all when you are doing so many different things. Dialogue with the BMA is great, but it’s even better when you have an association representing all the different interests to speak with one voice.
Helen Souza: One of the biggest advantages Bermuda has to offer is its associations, such as BILTIR, ABIR, ILS Bermuda, and the Bermuda Captive Network. The ability for them to get around the table and engage with the BMA and the BDA to protect and promote the domicile is invaluable. That’s probably one of our biggest competitive advantages.
“We have these touch points with other business associations.”
Martin Laframboise
Laframboise: That’s a good point: our close connection with other stakeholders such as business associations. In addition to our advocacy role on behalf of our members, we have these touch points with other business associations making sure that we keep and maintain the commercial appeal of Bermuda in speaking the same voice.
Our members are very diverse. They operate in Asia, the EU/UK, the US, they’re direct writers, they’re reinsurers, etc. Some of them are life and non-life. So, BILTIR ensures that it represents the interest of its members as one voice for the entire long-term sector.
“The industry is growing so significantly and getting so much attention.”
Helen Souza
Adderley: The non-life business has driven the development of Bermuda, and the life business now benefits from that. So the education has been happening for some time.
Souza: You’re probably right. It’s significant for sure. I agree that collaboration between BILTIR and the BDA is essential. It is helpful also from an external advocacy perspective. We are certainly getting more calls and this is because the industry is growing so significantly and getting so much attention.
In terms of interacting with external people, educating them about what Bermuda has to offer and working closely with BILTIR helps push forward the Bermuda agenda.
Image courtesy of Shutterstock / Peter Bocklandt
