The History and Future of Reinsurance in Bermuda
The History and Future of Reinsurance in Bermuda by Aleem Qureshi, Chief Strategy Officer, Legal & General Reinsurance
Before I came to Bermuda in January 2021, I was aware of the island’s global reputation as a reinsurance hub. However, over the past year and half, I have really come to appreciate just how much work the BMA and the various association of re/insurers do on island to protect and enhance Bermuda’s reputation and position as a leading international financial centre.
Establishing itself as a global leader
Bermuda’s impressive reinsurance history goes back more than 70 years. In 1947, American International Co. Ltd. was formed to write all of AIG's non-life business and the following year International Reinsurance Co. became the first reinsurance company to operate on the island. Now known as the “world’s risk capital”, for close to 50 years Bermuda has set itself apart as the leader in the development and regulation of captive insurers. Bermuda also enjoys its status as the jurisdiction of choice for insurance-linked securities (ILS) transactions, with more than half of the share of the global alternative capital market.
Bermuda has also recently seen significant growth of its long-term life reinsurance sector. Most of the long-term business has originated from North America, Europe and Asia with products spanning traditional life, annuities, disability income, critical illness and health. The growth has been driven by the robust yet pragmatic regulatory environment created by the BMA and as the market has grown, so have the internal resources that the authority has dedicated to the life sector.
Why are we here?
When looking to build a global reinsurance hub for Legal & General and Bermuda was the clear choice for us. Our clients want to ensure they are working with a company that is well regulated and subject to high standards.
It's been great to see how well-respected and well-regarded Bermuda is in the industry, and they’re continuing to put the work in to maintain that. The BMA is committed to providing an open and transparent regulatory framework with requirements which are consistent with international best practice. Bermuda is recognised as both a Reciprocal Jurisdiction by the National Association of Insurance Commissioners (NAIC) in the US and a full Solvency II equivalent jurisdiction in the EU. For life re/insurers, the authority regularly consults with industry through Bermuda International Long Term Insurers and Reinsurers (the formal association representing life insurers and reinsurers in Bermuda).
Bermuda is critical to our strategy for providing both internal reinsurance and external reinsurance. We’ve worked closely with regulators to find solutions that work for us and our insurance partners allowing us to be at the forefront of bringing funded reinsurance solution to our partners in Canada and Europe.
Since we established our reinsurance business in Bermuda in 2014, we have built meaningful partnerships and have had several milestone transactions. There’s still a long journey ahead of us to fully realize our international growth ambitions but we’ve made good progress and that’s exciting – doing something innovative and seeing the fruits of that labour. Bermuda has played, and we expect will continue to play, an important part in that journey.