Aon Benefield is bullish on Bermuda

Where Bermuda was once behind, it now leads.

This week The Bermuda Monetary Authority released the number of insurance companies which set up shop in Bermuda in 2013.

In it, the number of special purpose insurers (SPI or SPV for vehicle) increased by 72 per cent to 51. (See below)

Bryon Ehrhart, CEO of Americas for Aon Benefield, is in Bermuda this week for his companY’s leadership conference at the Fairmont Hamilton, told the Bermuda Sun that “Bermuda has created its own trend. The reason Bermuda is seeing such growth in those special purpose vehicles is because Bermuda was very progressive in making the changes in the laws necessary to do securitization”.

He frankly said that Bermuda can do it “in a faster pace than other domiciles that had previously been the majority holder for those SPVs. Bermuda, today, in the capital markets, is the predominant domicile and five years ago it wasn’t. 

“That’s because of progressive, responsible regulation. Investors, lawyers and sponsors have confidence in contract certainty, legal enforceability and mature regulation. Those are the three factors that are really important in putting those transactions together. 

He said SPVs have been around for a while but has been pushed harder by the Bermuda Monetary authority and others causing the upsurge in registrations “to create the kind of environment that will be the domicile of choice for SPV”.

He said some of the previous barriers or restrictions for setting up these companies have been removed. 

“There was needless friction in transactions that were fully collateralized.”

Value

Mr Ehrhart added Aon Benefield values Bermuda “because our clients value it and our clients value it because of contract certainty”.

He said there are good businesses in Bermuda that are well-regulated.

“[Bermuda] is a place that when capacity is needed to be formed, it can be formed quickly. It has a regulatory environment that promotes capital flows to an industry when our clients need more capital.”

He said Aon has been in Bermuda through the three major waves of insurance formations from Hurricane Andrew up through Hurricane Katrina. 

“Each episode has shown that Bermuda is capable of leading teams to solutions our clients need.”

“There’s plenty of talent here that’s got a maturity about it that allows investors to feel comfortable to put monies under management from them.”

A look at new insurer registrations for Bermuda in 2013

91 - The number of new insurance companies in 2013

52 - The number of new insurance companies in 2012

72% - Percentage increase from 2012 to 2013

51 - The number of new insurance companies that were Special Purpose Insurers (SPI)

$9.2B - Amount of Insurance-Linked Securities represented in Bermuda

41% - Percentage of the worldwide stock of ILS represented by Bermuda companies