Review
The business – Amlin Bermuda
Market overview
The Bermudian market emerged in the 1980s as a response to the lack of available capacity for casualty insurance and reinsurance at that time. It has grown to be a mature market, particularly for US risks. Bermuda now hosts 13 of the top 40 reinsurers worldwide measured by net premium written. All of these companies hold, or are subsidiaries of companies holding, US$1 billion or more of capital.
The market grew materially following the 11 September terrorist attacks, when a number of new reinsurance companies were set up to provide property catastrophe cover; often referred to as the Class of 2001. However, the mismatch between catastrophe risk and capital was exposed in many of these companies, as perceptions of risk were recalibrated after two extraordinary hurricane seasons in 2004 and 2005. The capital depletion that occurred presented another developmental opportunity, leading to the formation of a number of new companies – referred to as the Class of 2005. Amlin Bermuda is such a company.
The growth of Bermuda as a major reinsurance centre has undoubtedly been underpinned by a favourable tax environment but it now has a mature regulatory environment, infrastructure and concentration of insurance capacity. The corporation tax rate is currently set at zero.
The regulatory environment falls under the control of the Bermuda Monetary Authority (BMA). The BMA has a risk-based supervisory process, which categorises regulated entities according to a number of parameters within each class of insurance. Amlin Bermuda is a registered Class IV reinsurance company. Class IV reinsurance companies are required to have a minimum of US$100 million of capital on incorporation and can write reinsurance and international insurance. Subsequent minimum capital requirements are determined by an evaluation of the risk of the portfolio of business written and the asset base of the company.
Top