Bermuda offers a well-developed legal framework that allows for the seamless incorporation/formation of Bermuda vehicles and subsequent or contemporaneous creation of group structures. The flexibility of Bermuda’s law, including with respect to its company statute and partnership legislation, means that service providers are able to work with clients to reach their commercial objectives.
Bermuda is an income tax neutral financial centre, meaning that structures domiciled there are not the subject of direct taxation of profits or capital gains in the jurisdiction. This avoids adding a layer of complexity to international structures. However, it should be remembered that there may be taxes in the jurisdictions where shareholders or investors are located and they may be subject to taxation under their own tax rules on any income and capital gains.
The Island has a strong (re)insurance industry and has emerged as the leader in the insurance-linked securities (ILS) sector. This was through a commitment to embrace and encourage the ILS sset class by creating and maintaining the right legal and regulatory environment in which those structures could thrive. During the first quarter of 2016 Bermuda based special purpose insurers accounted for 62% of the new insurance volume and the average deal size for ILS transactions in Bermuda was $228 million, the highest on record since Bermuda entered the ILS space in 2010¹.
With international banks, accounting firms, offshore legal powerhouses, insurance managers, investment managers and administrators, Bermuda is able to meet all of a client’s service needs within the jurisdiction. Being able to operate in an environment with the ability to physically meet and establish working relationships with service providers, has undoubtedly been an attractive proposition.
For firms which already have a (re)insurance presence in Bermuda, we are seeing continued interest in expanding their offering to include ILS. This offers clients the chance to build a new line of business within a familiar legal and regulatory framework with service providers (or their affiliates) well versed with how they do business.