Bermuda is in a strong position to hold on to its insurance-linked securities business — despite attempts by the City of London to muscle in on the sector, ILS Bermuda chairman Greg Wojciechowski said yesterday.
Mr Wojciechowski was speaking after a report by global accounting firm Grant Thornton in partnership with UK Trade and Investment said that London and the UK will struggle to attract ILS business.
The report found that, while the city is still a pre-eminent insurance and reinsurance centre, recent efforts to bring in ILS catastrophe bonds and collateralised reinsurance business might not be successful.
Mr Wojciechowski said: “Bermuda’s time-tested tax, legal and regulatory infrastructure, coupled with extensive industry experience and proximity to the largest financial and insurance markets, make it an ideal location to provide support to the evolving ILS asset class.
“Bermuda’s has all of the elements in place that other jurisdictions are attempting to deploy. Bermuda doesn’t have to build, it’s here.”
And he added: “We are now focused on how to continue to drive innovation in this segment for the benefit of the market and Bermuda’s clients.”
The Grant Thornton report said that the UK government had committed to work with the industry and regulators to develop a competitive corporate and tax structure to allow ILS vehicles to be domiciled in the UK.
But it added that this would require major effort — and might even be out of reach.
The Grant Thornton study said that there were “considerable hurdles” to be overcome for London and Britain to establish as a viable destination for alternative capital and ILS.
And the report added that tax environment in Britain was seen as “too hostile for those looking to establish an ILS onshore in the UK”.
Bermuda was singled out for the speed at which it can approve new catastrophe bond vehicles compared to the UK.
The report said: “The UK regime is used to taking months, and in some cases a year, to authorise vehicles.”
Mr Wojciechowski, who is also CEO of the Bermuda Stock Exchange, said the Island would continue to promote itself as the premier destination for alternative capital and ILS.
He said: “In November, ILS Bermuda Ltd, in conjunction with the Bermuda Business Development Agency and industry partners, will once again showcase Bermuda’s experience when it hosts the third annual Bermuda Convergence 2015 event.
“The event has become a staple on the global ILS meeting calendar.”
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Source: The Royal Gazette