NU Online News Service, June 24, 12:28 p.m.EDT

BERMUDA–Despite the economic downturn, Bermuda remainsa major player in the global captive marketplace. That was themessage delivered by officials at the Bermuda CaptiveConference.

Paula A. Cox, Bermuda deputy premier and minister of finance,said Bermuda is an international leader in captives, noting it wasamong the first jurisdictions to incorporate rent-a-captives.

Ms. Cox remarked on the quality of the island's captivemanagers, brokers and underwriters, noting that Bermuda's share ofcaptives is about 30 percent of the worldwide market.

In figures just released, she said there were 1,149 licensedcaptives at year end in 2007, with assets of $88.8 billion in 2007.The overall rate of retention was 81 percent, with 57 percent ofbusiness being casualty coverage and 41 percent property coverage,she said.

Preliminary figures for gross written premium for 2008, for allcaptives, was $19.8 billion, compared to $19.4 billion in 2007 and$21.5 billion in 2006, according to the Bermuda Monetary Authority.Among the captives, 13 percent were from Europe, 58 percent fromNorth America, and 8 percent were from the Caribbean and SouthAmerica.

Alan Thompson, president and chief executive officer of the Bankof NT Butterfield and Son Ltd, said during a panel discussionfollowing Ms. Cox's statements that he believes Bermuda has faredbetter than most other captive locales.

From a banking perspective, he said, "We've seen very littlechange. If you look at the U.S. market today, there's a lot ofconcern about residential mortgages." In comparison, he said thatlast year in Bermuda there was one foreclosure. The bank's mortgageportfolio, he said, "continues to be very solid."

So far, he added, "knock on wood, I think we've done fairlywell, and a lot of that happens to be the insurance and reinsuranceefforts."

Ms. Cox observed the world has been experiencing an "economictsunami" that also has affected Bermuda. What is key, she said, areBermuda's "two pillars," international business and tourism. Sheadded that while she prefers to see the glass as "half-full," sherecognizes there are challenges ahead.

Jeremy Cox, deputy chief executive officer of the BermudaMonetary Authority, said the word describing Bermuda is "nimble" inall sectors. He said Bermuda "has always been able to weather thestorm" and has built a solid foundation, from a regulatory andmarket perspective.

Bermuda, he said, is viewed as a stable jurisdiction able towithstand economic challenges. "It has shown its approach tosupervision and that it is able to mobilize and to be prepared whenthings do turn around," he said.

On the regulatory side, Mr. Cox noted that Bermuda achieved avery high standard of compliance with the International FinancialMonetary Review in 2007. He said that previously, in 2003, thescore card wasn't as good and, as a result, Bermuda focused onclosing the gaps.

Now, he said, Bermuda has had much success with theInternational Association of Insurance Supervisors, where he servesas the vice-chair of the reinsurance committee, vice-chair of thegroup supervisory committee and sits on other committees aswell.

He added, "For such a small island–22 and a half squaremiles–we've done a tremendous job from a regulatory perspective, inmy view, of matching up to the skills and the talents you see inthe market."

Bermuda does have one challenge, Mr. Thompson said. He notedthat in this environment there has been "heated political rhetoric"out of some places–much of which is "just wrong."

He said that while the facts about Bermuda are good, statementsare being made that blame offshore jurisdictions nearly "for thewhole subprime crisis."

As a result, there is "a lot of political rhetoric right now,"he said. "And one of the challenges is making sure that the policymakers in other jurisdictions are acting on facts and not heatedemotions."

He said that every offshore jurisdiction is different and theyshouldn't be lumped together. "What does 'offshore' even meananymore?" he asked.

Asked about Bermuda's ongoing challenges, Mr. Cox said,"Standards and shifting standards." He said that during the firstwave of the banking crisis, regulators talked about strongerbanking standards.

He said he now hears discussions about how to address some ofthe gaps identified by the financial crisis. "What we have to do ismake sure that as the gaps are closed," more challenges aren'tcreated that challenge Bermuda's success.

Another issue that needs to be addressed is the problem causedby the economy, Mr. Cox said. Because of cost-cutting, he remarked,"we've got to challenge ourselves–we need to do better withless."