Finance

Bermuda has steadily carved out a reputation for being a global capital for international business and financial services. Innovation, a focus on quality, proximity to the United States, accessible policy-makers, and a strong regulatory environment have combined to make the “Bermuda model” a benchmark for financial services centers worldwide.

Bermuda offers depth of experience and a diversity of products.

In addition, according to Deputy Premier and Minister of Finance Paula Cox, “Bermuda has real services with real people on the ground. It is not a brass plate jurisdiction.”
In fact, international business has now outpaced tourism as Bermuda’s leading economic sector, and Bermuda has become what Cox calls “a magnet for Fortune 500 companies.”

While the island nation is currently aiming to boost its tourism activities, building on Bermuda’s beautiful beaches and many other attractions for visitors, it is also making sure that its international business sector continues to thrive. Citing Bermuda’s competitive advantages as a business base, Cox says, “Bermuda is a well-regulated environment, with regulations that are not unduly burdensome for business but that nevertheless adhere to appropriate international standards. We also have a very professional infrastructure and our speed to market is very good.”

Cox adds that one advantage for American companies of doing business in Bermuda is the long-standing close relationship between Bermuda and the United States, symbolized by the presence of an American consular office on the island.

As for the future, Bermuda’s business sector will continue to remain globally competitive, Cox predicts. She states: “There has been much turbulence and market volatility. There is the need for financial markets to settle down. Business flourishes in a climate of certainty. Bermuda provides stability and quality controls. The turmoil in the financial markets will re-organize the financial landscape. However, this does not necessarily mean that the financial landscape will shrink dramatically. Rather, the changes could lead to an increase in the demand for financial services as the world grapples with new financial instruments and new risk management techniques. There is a role for Bermuda as the trend towards the convergence of the capital markets with insurance products in a spirit of innovation continues.”

Minister Cox believes that reinsurance and insurance activities could expand even further, along with hedge funds. Tourism and telecommunications, including satellite communications, are other growth sectors for the island. She concludes, “We have had continuous economic growth since 1998 in spite of changes in political leaders. Bermuda offers depth of experience and a diversity of products. Given the enhancements we have made in our legislative and regulatory framework, Bermuda is well positioned as a premier international financial centre and as a jurisdiction of choice. This process of continuous improvement builds on Bermuda’s sound regulatory regime and integrated financial sector supervision. The Bermuda story is a story of efficiency and effectiveness.”

Bermuda Monetary Authority

“We see ourselves as a risk-based supervisor.”

Bermuda’s thriving financial sector is efficiently overseen by the Bermuda Monetary Authority, which has developed a sound, world-class regulatory environment. Matthew Elderfield, CEO, is widely respected for his dynamic leadership.

He describes the BMA, which will celebrate its fortieth birthday next year, as “Bermuda’s single financial regulator, a quasi-central bank. We benchmark ourselves regularly and are committed to maintaining a high international ranking.”

Elderfield explains that Bermuda’s financial sector is dominated by insurance (Bermuda is the global leader in captive insurance), banking, investment services and hedge funds. To properly regulate these activities, the BMA continuously upgrades its rules and focuses on its key role as “a gatekeeper to Bermuda,” Elderfield says. The BMA works with the Ministry of Finance and Bermuda’s registrar of companies to vet new entries to the local market, for example. He adds that the BMA also works hard to maintain Bermuda’s reputation for ease and speed in incorporating new companies.

The BMA also tailors its approach to fit Bermuda, which Elderfield describes as principally a wholesale market of high-net-worth individuals and large insurance firms.

One reason for Bermuda’s strength and resilience is its concentration of high-quality services. Elderfield says, “There is a network of hedge fund capital money, captives, and commercial insurers who can just go across the street to meet. It’s that aspect that really makes Bermuda unique. There is a critical mass on the insurance side that has been a great success. Bermuda is bigger than Lloyds of London in terms of capacity.”

Harbor Point Re

“Bermuda is the leading marketplace in our business.”

Harbor Point Re, the Bermuda-based global reinsurance company, was formed in late 2005 in response to an anticipated increase in demand for property catastrophe reinsurance. The company acquired all of the assets, including renewal rights, of Chubb Re at that time.

Today, all Harbor Point’s property catastrophe business is handled in Bermuda. As CEO John Berger explains, “Bermuda is the leading marketplace in our business, and the ‘short-tail’ insurance capital of the world. Bermuda’s insurance sector is much bigger than those of its competitors, such as the Cayman Islands. In addition, the authorities here are very user-friendly, the tax situation is advantageous, and there are very good human resources.”

Harbor Point’s clients range from major international enterprises like AIG and Zurich Financial Services to smaller regional insurance companies in the United States. “We also work with other reinsurance companies, which is typical in our business. We are not a major reinsurance player, but we are substantial, and we have a very diversified portfolio,” Berger points out.

The company has a staff of 70, 25 of whom are based in Bermuda. Harbor Point also has offices in London and New Jersey, but the Bermuda operation accounts for around 40 percent of Harbor Point’s business, according to Berger. Defining Harbor Point’s competitive edge, he says, “It all comes down to performance. We are very professional.”

Harbor Point has made a long-term commitment to Bermuda, where the company supports a number of community-service programs, a policy it applies in all its markets. Commenting on Bermuda as a business base, Berger says, “There are many misconceptions about Bermuda. Nine out of ten New Yorkers probably think that Bermuda is in the Caribbean. It is not. Bermuda is a wealthy and safe island with a high-quality lifestyle and excellent conditions for doing business.”

Validus

“What we sell is a promise to pay.”

Reinsurance and Insurance specialist Validus works with leading insurers all over the world from its base in Bermuda and offices in London, Miami, Singapore and Italy.

Defining the company’s competitive edge, CEO Edward J. Noonan says, “We are a conservatively managed business with capital of approximately USD 2 billion, with a Bermuda based reinsurer, Validus Re; a Lloyd’s of London syndicate, Talbot Underwriting and specialist multi-line underwriting insurance agency, Underwriting Risk Services. At its core, our product is a promise to pay claims when an event happens. After the recent hurricanes Gustav and Ike, we wire-transferred millions of dollars to insurance companies so that they did not have to sell bonds to pay their claims. We are very quick to act.”

Validus invests in the latest technologies and in the highest quality human resources. It continues to develop a varied portfolio with many lines of insurance, including terrorism insurance and underwriting of oil rigs in the Gulf of Mexico. The company has earned a strong reputation for its analytical talents and for its rapid responses.

Bermuda is the ideal base for Validus, Noonan believes. He says, “The regulatory regime is robust, Matthew Elderfield [CEO of the Bermuda Monetary Authority] and Finance Minister Paula Cox are excellent regulators, and companies here are diligently run. Another key asset Bermuda offers is that it combines rigor and conservatism with speed to market. Many other places have tried to emulate Bermuda, but it is very difficult to compete with Bermuda’s extraordinary intellectual capital in the reinsurance business.”

Validus’ head office in Bermuda makes an effort to hire locally; 60 percent of its employees are Bermudians. The company also supports local community-service and cultural projects and is committed to helping to enhance Bermuda’s international image. Noonan concludes, “The caliber of the people and the high level of commitment of our Bermudian staff to professional development are an important reason we are located in Bermuda. Bermuda is expensive, but so are London, New York, Singapore and Dubai, and Bermuda offers a great quality of life.”

“We are the capital that stands behind the global insurance industry, and we continue to weather the global credit crisis with no diminution in the quality of our promise to pay.”

Max Capital

“Max is well positioned here in Bermuda.”

Max Capital, through its operating subsidiaries in Bermuda, Ireland and the United States, provides a wide range of specialty insurance and reinsurance products to corporations, public entities, property and casualty insurers and life and health insurers.

While the company’s underwriting strategy focuses on creating customized solutions that add value for clients, it utilizes an investment strategy that combines investment in traditional high-grade fixed income securities, tailored to the underlying insurance liabilities, with an allocation to alternative investment classes.

Defining his company’s competitive edge, W. Marston (Marty) Becker, CEO, explains, “We believe we are simply the best! We differentiate ourselves by providing value and great service and through attracting uniquely competent people. In addition, we are well positioned here in Bermuda, and we aim to be transparent. We like to operate in specialty niches, an approach that has worked well for us.” Max Capital’s product portfolio includes property and casualty insurance and reinsurance, specialty insurance through Max Specialty, its United States-based excess and surplus lines platform, and life and annuities reinsurance. In addition, the company recently announced that it has entered into an agreement to acquire a Lloyd’s insurance operation.

Max Capital is a strong supporter of Bermuda’s financial-services sector. “This is an institutional investor’s world – investors in this industry cannot overlook Bermuda. We have a large concentration of talent in a small geographical area and Bermuda’s financial sector is pretty much unsurpassed,” Becker says.

Becker explains that Max Capital is helping to promote Bermuda worldwide and that the company works with the government and the private sector to boost Bermuda as a base for business. Max Capital also supports a number of community projects, particularly those addressing clear social, educational and health care needs and problems within Bermuda and elsewhere.

“There will always be others trying to replicate what is on offer in Bermuda. Bermuda look-a-likes often spring up, such as Dubai, Singapore and Brazil, so Bermuda needs to remain competitive in terms of labor and costs of doing business,” Becker explains. Max Capital intends to help make sure Bermuda stays on the cutting edge.

Apex Fund Services

“We are developing a global brand.”

Apex Fund Services specializes in helping funds prosper. The company offers a wide range of services that include: accounting for hedge funds, private-equity funds and hedge fund of funds, acting as the corporate secretary of a fund, fund formation, 24/7 access to data about a fund, custom risk-management reporting, and much more.

Peter Hughes, Group Managing Director, explains, “Our model has worked well.”

Apex now has 12 offices and a staff of 120, but Bermuda is the company’s hub. “Bermuda offers proximity to the United States as well as extremely strong fund administration people. We are developing a global brand, and Bermuda has been a good place for us.” Hughes says. Apex has brought its standard and reputation to the markets by opening its offices in the financial crossroads around the globe that includes Dubai, Ireland, Hong Kong, Mauritius, Singapore and their latest, the United States.

Apex serves all types of clients, “from niche fund managers to large institutions. We service the whole spectrum,” Hughes points out. In fact, Apex defines its offering as a partnership rather than a service since the company always works closely with each client to provide the best possible personalized support. “We get on planes, go out and meet people,” Hughes says, defining the company’s hands-on approach.

Apex Bermuda has a stellar reputation in the global financial-services sector and operates according to American, international and local regulations. The company is known in Bermuda not only for its reliable funds services but also for its support for the local community and for its policy of employing Bermudians; locals make up half the staff of Apex Bermuda.

Hughes adds that Apex is committed to remaining in Bermuda rather than outsourcing in less expensive locations because of Bermuda’s strong regulatory environment, excellent human resources, ease in starting a business, and reputation for outstanding services. “Bermuda has an unblemished record because of the regulations that are in place and the service providers that follow them,” he says, adding that to continue to remain competitive, Bermuda must “keep moving ahead to stay on top.”

Shoreline Mutual

“Bermuda is an excellent environment for doing business.”

Shoreline Mutual provides an essential service to the shipping industry by acting as a guarantor to cover the financial responsibility of any membership owner in case of oil spills and pollution. As Marilyn T. Feldman, President, points out, “Shoreline provides very niche shipping insurance coverage.

We believe in quality, not quantity, and our market share is very solid.” The company serves clients from all over the world, and is managed by Shoreline Mutual Management (Bermuda) Ltd., a subsidiary of IAS.

Shoreline was formed in response to the 1990 Oil Pollution Act (OPA), instituted after the Exxon Valdez disaster, which requires that every ship over 300 gross tons that enters United States waters must provide evidence of its ability to pay for any oil pollution it might cause, up to the limits specified by the OPA. This evidence is in the form of a Certificate of Financial Responsibility (COFR) issued by the United States Coast Guard. Any vessel over 300 gross tons operating in the United States’ overseas territories and possessions must also have a COFR.

Shoreline’s service is to issue COFR guarantees to owners of vessels within the International Group P&I Club. As Feldman points out, “Shoreline delivers a fixed-cost COFR guarantee without compromising the benefits of a ship owner’s mutual. In addition, we abide by our mission statement, which is to obtain the best possible coverage for our members at the lowest possible price.” Shoreline stays in constant contact with the United States Coast Guard to keep abreast of new developments.

Dedicated to being user-friendly, Shoreline has developed a web site through which clients can access a wide range of services. Shoreline is thriving in Bermuda, which Feldman believes is the ideal base for the company. She says, “Bermuda offers location, location, location. It is an excellent environment for doing business.”

Canopius Group Limited (Canopius)

“Our focus is on the excess casualty side of the table.”

Canopius Group Limited (Canopius) aims to start off right. The five year old company with operations in London launched its Bermuda activities in December 2007. Since then, the company has expanded to Asia and Ireland. Their strategy is based on evolving market realities.

As CEO Susan J. Patschak explains, “I think the wave of the future in insurance is clients with less exposure to a single company. That is good news for us just starting out. We are hopeful that our business will expand even more quickly than we thought possible.”

Canopius Bermuda has a staff of six in Bermuda, most of whom are Bermudians; Head of Operations is Jonathan Farrow, Head of the Insurance Group is Stephen Hartwig. Ms. Patschak, a native of Maryland, handled worldwide property catastrophe reinsurance for Endurance Specialty Insurance Limited before establishing Canopius’ presence on the island.

The Canopius Bermuda platform includes two operations: Canopius Underwriting Bermuda Limited (CUBL), a wholly owned underwriting agency that will operate as a Lloyd’s of London-approved cover holder for Syndicate 4444, managed by Canopius Managing Agents Limited; and Canopius Bermuda Limited, a class-three reinsurance company with initial capital of USD 250 million.

CUBL’s portfolio includes excess casualty and healthcare insurance, property catastrophe and workers’ compensation catastrophe reinsurance. Ms. Patschak says, “Our focus is on the excess casualty side of the table. The agency targets Fortune 1000 and FTSE 250 companies, and professional liability (medical malpractice) for hospitals with a regional focus and good risk-management capabilities.”

Canopius Bermuda is carving out a niche for itself on the island. The company focuses on adding value for its clients through providing innovative solutions and being “flexible without giving away the shop on terms or pricing,” as Ms. Patschak puts it. This dynamic young firm has significant prospects.