Bermuda set to recapture greater share of offshore fund industry, expects high growth from end of worldwide banking secrecy

Bermuda is the quintessential Anglo-American blue-chip jurisdiction, both culturally and geographically. Fifteen of the world’s top 40 reinsurers are based in Bermuda, making up about 36% of the global reinsurance market based on property/casualty net premiums earned. Bermuda is also leading the world in the issuance of insurance-linked securities (ILS), predominantly catastrophe bonds, representing 70% of total outstanding ILS capacity. If you are in reinsurance or in ILS, Bermuda is the place to be.

Not too long ago, in the 1980s and ’90s, Bermuda was the domicile of choice for offshore funds. All the old hands in the industry will remember the MARHedge conferences at the Fairmont Southampton hotel, which was the go-to event for over a decade (for those who remember, Greg Newton left us way too early and is sadly missed). Then, the flow of business slowed, as other jurisdictions decided to focus primarily on that industry and overtook the jurisdiction.But more recently, Bermuda has been working hard to recapture a greater share of the offshore fund pie and fine-tuned products and services.

Bermuda expects high growth from end of worldwide banking secrecy

Two additional factors are having a material – and positive – impact on Bermuda. The first is the end of banking secrecy, and by definition the inevitable decline of jurisdictions that had built their offering mainly around providing secrecy rather than delivering a more comprehensive solution. Banking secrecy is effectively a thing of the past, and we are only just beginning to see the effects of this transformation. The players in Bermuda believe the jurisdiction will continue to be a meaningful beneficiary of this shift because it has never been a business destination where people came to look for secrecy. Historically, companies and individuals have sought to do business in Bermuda for reasons other than secrecy: political stability, legal security, the quality of service providers, cost efficiency, the strength and depth of the labor pool and other factors. Regardless of the growth of the asset management industry globally, Bermuda is in a unique position to capture significant market share going forward. Many businesses will be looking for a new home in the coming years and secrecy will no longer be a factor in their decision-making process.

The second factor is the convergence between insurance and asset management – that is, the rapid emergence of ILS as a validated asset class that transcends pure reinsurance. The ILS space has flourished over the last 3-4 years and this sub-segment of the asset management space has made Bermuda its location of choice. The high level of expertise and experience among the service providers in Bermuda in dealing with more complicated instruments also holds for private equity funds and other alternative investments.

The attached 24 page Roundtable tells the full story..

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