Bermuda Emerges as Preferred Domicile for ILS Vehicles

It would appear that the labours of Bermuda’s business executives and the Bermuda Development Authority are paying off. According to a recent report released by Willis Capital Markets and Advisory, over the last few years Bermuda has surpassed the Cayman Islands when it comes to domiciling ILS vehicles.

Bermuda and the Cayman Islands have vied for international business for decades in the tourist, insurance and asset management industries. Bermuda has emerged as a clear winner in the arena of domiciling ILS vehicles.

 

When firms select a jurisdiction, several factors are considered:

  • The experience of the managers in the jurisdiction
  • The efficiency of the local regulator
  • The views of the sponsor’s home regulator
  • The perceived reputational risk associated with each jurisdiction
  • Cost

From the mid-1990s through 2012, nearly all of the cat bonds issued were domiciled in the Cayman Islands. According to the Willis report, “despite Cayman’s new Insurance Law in 2013, Bermuda has emerged as the preferred domicile for new ILS vehicles, and in 2015 more than two thirds of the global cat bond capacity has been issued form Bermuda.” While Cayman and Bermuda offers similar prices and services, sponsors’ “greater familiarity with and connectivity to Bermuda in the (re)insurance world has gradually won out.”

According to the Bermuda Monetary Authority Report issued in September, 2015, ILS issued from Bermuda represents 67% of total outstanding ILS capacity. “Bermuda is also host to foreign ILS listings, which augment the depth of the secondary market.”

The ILS Convergence conference opening in Bermuda on the afternoon of 11th November will attract hundreds of insurance experts and fund managers, and will provide networking opportunities to enhance Bermuda’s reputation as a leading jurisdiction in this industry sector.

In this growing market, Oyster Consulting (Bermuda) has the experience and expertise to assess your ILS operations, trading and compliance needs on an ongoing basis, and implement practical solutions to improve your control environment. For more information on the services Oyster Consulting (Bermuda) offers, contact Alison Morrison, Managing Director at alison.morrison@oyster.bm or see our website www.oyster.bm.

To review the report in its entirety, click here.

To view a summary of the Bermuda Monetary Authority’s Bermuda Insurance-Linked Securities (ILS) market Report, click here.

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