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Bermuda’s captive market remains the largest

15th February 2017 - Author: Steve Evans

The captive insurance and reinsurance market in Bermuda remains the largest in the world, with registrations in 2016 helping to keep the islands captive register stable during the year.

A total of 776 captive insurers were registered on the island at the end of 2016, with 13 new captives registering over the twelve months.

These new registrations were largely from the U.S., although two came from emerging captive markets in South America and Latin America.

Craig Swan, Managing Director, Supervision at the Bermuda Monetary Authority (BMA) commented; “The Authority continues to ensure that Bermuda’s captive sector – which has made significant contributions to Bermuda’s economy for well over 50 years – remains appropriately regulated. The global companies that operate captives from Bermuda expect top quality regulatory standards. As such, the Authority ensures that its supervisory framework for captives, has remained aligned with the Insurance Core Principles of the International Association of Insurance Supervisors.”

Captives remain a core component of many international organisations risk management facilities and in some cases now are established as captive reinsurance vehicles for primary insurers as well. The lines between self-reinsurance and captives are increasingly blurred, as too are the lines between captives and funded insurance vehicles, as some corporate captive sponsors look to finance parts of their captives by working with specialist re/insurers.

The Bermuda Business Development Agency (BDA) said that the Bermuda captive market is now responsible for generating more than $55 billion in annual gross written premiums and that Bermuda enables captive owners to also active open insurance and reinsurance market capacity with ease.

“The Bermuda Monetary Authority figures reaffirm Bermuda’s status as global leader in the captive insurance market, with more overall captives registered than any other jurisdiction,” said Ross Webber, CEO of the BDA.

“It’s important to note that Bermuda held its number-one position atop captive domiciles despite challenging market conditions that have reduced the year-over-year global total of captives registered,” Webber added. “The market has seen numerous mergers, acquisitions and consolidations, in which corporations have taken cost-cutting steps to integrate multiple captives into single vehicles—a trend affecting all markets.”

Captives are also becoming a popular tool for high net worth individuals and family offices for wealth preservation and succession planning, the BDA said.

The United States remains the major source of Bermuda’s captive business though, as Jereme Ramsay, Business Development Manager at the BDA explained; “With increasing competition in the captive space, especially with the rise of pop-up domiciles in the US, we feel it’s more critical than ever to promote Bermuda’s value as a top-tier jurisdiction and highlight our robust re/insurance market. The heightened involvement and support by industry speaks to the collaborative efforts of the BDA, our regulator and private sector to maintain Bermuda’s leading position as the domicile of choice for captive insurance business.”

“Bermuda captives wrote $55.3 billion at latest count, which more than quadruples posted premiums in the closest competing domiciles,” Ramsay continued. “Additionally, we are seeing increasing interest from emerging markets such as Central and South America, where, not coincidentally, the BDA has been focusing business development efforts over the past year. Following targeted trips to Mexico and Chile led by the BDA, a new captive from Mexico and the first ever captive from Chile incorporated on the island.”

At 31st December 2016 there were:

  • 225 Class 1 captives
  • 280 Class 2 captives
  • 255 Class 3 captives
  • 8 Class A captives
  • 8 Class B captives
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