Filed Under:Risk Management, Loss Control

Bermuda Bourse Wants More Cat-Bond Listings

The collapsed causeway which connects Hamilton, Bermuda with the international airport after Hurricane Fabian in 2003 (AP Photo/David Skinner, The Royal Gazette)
The collapsed causeway which connects Hamilton, Bermuda with the international airport after Hurricane Fabian in 2003 (AP Photo/David Skinner, The Royal Gazette)

LONDON, April 23 (Reuters) - The Bermuda Stock Exchange aims to attract more listings of catastrophe bonds and other insurance-linked securities, taking market share away from its biggest rival, the Cayman Islands bourse, its Chief Executive said on Monday.

"I do know that our exchange is a bit deeper in terms of the services it provides," Greg Wojciechowski told Reuters.

"I think the capital market, as it gets greater exposure to this space, will understand theBermuda product, and seek to have those securities sited there."

The Bermuda bourse has listed some $4.25 billion in catastrophe bonds, debt-like instruments that offer an income to investors in return for taking on some of the issuing insurers' liabilities.

That is equivalent to about half the total for the Cayman Islands Stock Exchange as of February this year.

Bermuda began competing for catastrophe bond business in 2009 as it became clear that reinsurers based on the island were increasingly relying on the instruments to raise capital.

"We are firmly focused on this segment because I feel that as capital market operators in the third largest insurance industry, I must be supporting these instruments, which provide the life blood for the industry," Wojciechowski said.

In a sign of Bermuda's determination to boost its share of the insurance-linked securities market, the island's regulator earlier this month halved the annual license fee payable by operators of so-called special purpose insurers, vehicles used to issue cat bonds.

Bermuda has over the last 30 years established itself as one of the world's leading insurance hubs thanks to a business-friendly tax and regulatory regime that has encouraged dozens of insurers and reinsurers to base themselves on the island.

The Bermuda Stock Exchange, founded in 1971, offers trading in equities, funds and debt-like securities with a combined market capitalisation of about $300 billion.

Wojciechowski said the acquisition of a 16 percent stake in the Bermuda bourse byToronto Stock Exchange operator TMX Group last year had shored up its position in the fast-consolidating exchanges sector, and would help it develop new services.

"This is really going to be a game-changer for the Bermuda Stock Exchange," he said.

"We're working very actively with the TMX Group to see how we work together to create mutually beneficial services for our clients."

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