Re/insurers welcome the introduction of a 15% minimum tax in Bermuda by the Government of Bermuda and expect it to remain a highly competitive jurisdiction.
On 8 August 2023, the Government of Bermuda announced that it had opened a series of consultations on proposals to introduce a corporate income tax (CIT) that would be imposed at a rate ranging from 9% to 15%.
This would only apply to Bermuda businesses that are part of Multinational Enterprise (MNE) Groups with annual revenue of €750m or more.
Re/insurers are likely to form the largest segment of international companies as their reported annual revenues are higher than this figure. They would be liable to pay the tax, which is likely to be set at 15% of annual net income.
The tax would be effective beginning in 2025.
During a panel at the PwC Insurance Summit held in Bermuda in November 2023, re/insurers shared their thoughts on the introduction of this new tax.
Orla Gregory, President of the Enstar Group, stated: “We’re embracing that there is going to be the minimum tax implemented here. We’re certainly here to stay in Bermuda for the long term. And so, we welcome us being taxed at a Bermuda level that stops us being exposed to the tax by other jurisdictions in a way that would be more punitive.”
Commenting on a tighter capital regime she said: “I think that’s all good as well. We want to maintain our solvency equivalency. And so, even with potentially more difficult regulatory requirements, I think the [Bermuda Monetary Authority] BMA is still a very commercial, friendly regulator, and I think that will continue to attract business to Bermuda.”
“There’s a lot to be said for being an established jurisdiction. There’s a lot to be said for being an established company that acts in the market,” she continued.
“It is what you know, and even with the changes here, I think Bermuda is very innovative. Whether it’s the captive space or the legacy space or ILS, a lot of the new ideas and idea generation comes from here. And so, whether those statistics hold, certainly from a legacy perspective, I think this is the home of legacy, and so, we’ll be here.”
Kevin O’Donnell, President and CEO of ReniassanceRe shares similar thoughts with Gregory, especially following the Validus acquisition, a Bermuda-born company, from American International Group (AIG).
He said: “Bermuda is our home. We just doubled down in Bermuda with the purchase of Validus. I agree with everything that Orla said. I think Bermuda is a very well respected jurisdiction.
“A company like us, we have locations in the other markets around the world and we keep our holding company here because of the infrastructure and the advantages we have in working with the BMA.”
O’Donnell believed that now that a 15% minimum tax has been introduced in Bermuda, a lot of things will change, and noted that the jurisdiction has been very collaborative in thinking about how to implement that.
He added: “I think it’s smart for them to put in the 15%. I think companies here are generally supportive; if we’re going to pay for it, we’d rather pay it locally than have it shipped elsewhere. So now it’s just a matter of how the world emerges in the new 15% world.
“But from our perspective, I think Bermuda will remain a highly competitive jurisdiction and Bermuda will certainly remain our home.”
