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B4 Bermudian market
The Bermudian market has developed into an accepted part of the mainstream capacity of the global
reinsurance market and its main carriers have expanded across the globe (for example, about 13% of the
capital at Lloyd’s is managed by groups whose parents originate from Bermuda). It is also the world’s
leading market for insurance-linked securities.
Bermuda primarily grew as a captive market as the offshore low tax regime gave it advantages
Bermuda primarily
grew as a captive particularly for US-based companies. This led to Bermuda becoming the primary domicile for captives.
market Today, it is home to over 1,200 companies and, while the USA remains the biggest source of captive
business, accounting for over half of the insurance formations, the picture is changing as many now
have African, Middle and Far Eastern, Australian and Latin American owners.
However, the Bermudian market has developed into a source of capacity with Everest Re, PartnerRe,
Maiden Re, XL Catlin and AXIS, among others, setting up to provide substantial capacity. Originally the
areas of excess liability and directors and officers were the main focus of these groups but they have
expanded into new areas considering the developments of reinsurance globally, especially the
alternative risk transfer (ART) market.
Development of the Bermudian property/catastrophe market
By 1992, the global property/catastrophe market had endured an unprecedented five-year run of costly
catastrophe losses that included tornadoes, hurricanes and Piper Alpha. These losses brought many
insurers and reinsurers to the point of insolvency. The decline in the number of active reinsurers and the
reduction in underwriting capacity of others allowed for the development of the property/catastrophe
market in Bermuda.
Prior to 1995, the regulation of companies in Bermuda was perceived to be less rigorous than in other
markets. The country was characterised as a low tax environment with low entry barriers for insurance
companies. Government supervision and regulation were via a self-policing model made up of industry
members. These factors encouraged investment, but not so much the protection of policyholders.
Proper regulation was needed if global markets were to accept Bermudian companies as viable
The IAA tightened up
reporting and mainstream suppliers of capacity. The Insurance Amendment Act 1995 (IAA) tightened up reporting and
solvency solvency requirements and gave increased protection to policyholders. IAA also created four classes of Reference copy for CII Face to Face Training
requirements
companies, which separated single parent captives from highly capitalised publicly traded companies of
global reinsurers, and permitted greater powers of intervention where an insurer risks becoming
insolvent or being in breach of the law.
Following 9/11, the Bermudian market reacted to hardening rates by seeing new companies set up.
Excellent infrastructure and flexible insurance regulations allowed them to start quickly in order to take
advantage of what was perceived to be a potentially good business opportunity. These companies were
well capitalised, had strong reinsurance backing and did not have the loss experience of more
established players.

Between 2002 and 2004, Bermuda carriers opened and expanded their operations in the USA and
Europe to maximise their visibility and provide capacity for clients. This underlined Bermuda-based
companies’ intentions to play a main role within the global reinsurance arena.
Bermuda’s insurance market has continued this trend of growth ever since. In 2017, the Bermuda
Monetary Authority reported that its market’s total insurance assets had reached US$631.7bn as at the
end of 2015 with net written premiums of US$108.5bn (that is, US$45.4bn written by captives and the
rest by the commercial sector).
9 Current status
Chapter Bermuda has become one of the world’s top three jurisdictions in the global market along with the USA
and Europe, and Bermuda’s importance in this regard has accelerated in recent years, and it is now the
largest property catastrophe reinsurance market. It also has a growing casualty market with a number of
the US top ten professional liability reinsurers.
According to Standard & Poor’s 2017 reinsurer rankings: Bermuda has 13 of the top 40 reinsurers (Europe
Bermuda has 14 of
the top 40 reinsurers has 9 and the USA has 6), although entities based in Europe still have almost 55% of the net reinsurance
premium written (USA 15%; Bermuda 12%). Bermuda reinsurers make a significant contribution to the US
economy. Bermuda is the leading non-US supplier of reinsurance to US insurers, providing a critically
important source of risk capital for the US market.