ILS Bermuda Executive Roundtable 2016
Article first published in Artemis in January 2017
Welcome to the second Artemis ILS Bermuda Executive Roundtable, in which our participants explore a variety of challenges and opportunities for the sector as it continues down its impressive growth path in Bermuda, and beyond. Roundtable participants, consisting of prominent executives from the Bermuda ILS or reinsurance market and beyond, highlighted the importance of innovation in the current market environment, and were keen to discuss both the benefits and potential implications of more standardised reporting within the ILS space.
The demand for ILS is clearly there, but how can the industry ensure it’s got access to the risk investors need, and continue to create opportunities for its investor base? Is there anything Bermuda can do, specifically, to capitalise on continued investor interest?
Adderley: For me it would be the speed to market of ILS platforms that we create. I think often when we create new products people are concerned whether they’re going to work, the time it’s going to take and the cost to do them. If we create platforms that allow us to do things faster and more cost-effectively than a normal traditional cat bond, investors will want them. So if we’re able to create ILS platforms, collateralised platforms which allow us to get to the market quickly at a cheaper cost, then there’s more of a chance, in my mind, that other new products, different risks or new investors will come.
There is obviously competition out there, there have obviously been a lot of interesting comments about Bermuda from Lloyd’s and the London Forum, but in some ways some of the other jurisdictions are helping Bermuda without realising they’re helping. I understand, Germany has said that if you want to market products into Germany you have to be a Solvency II compliant company.
So then I think, “What jurisdictions are competing with us.” How many jurisdictions have companies, which are deemed to be Solvency II equivalent? For us, SPIs would not be. So what are we seeing now? We’re seeing a lot of people today going to us, “Brad, let’s take over SPIs and upsize it to be a Solvency II equivalent class, 3As, 3Bs and 4s.
It’s good for us, but the problem for everyone else, Gibraltar, Malta and the rest who are trying to get into the space, is they don’t even have that in their bag. So yes, there is competition but in some ways what we’re going to have to do is make sure that when laws in other jurisdictions change, can we as a jurisdiction, Bermuda Monetary Authority (BMA), make sure our laws comply with theirs to allow us to do business?