NEW YORK–The flood of capital that has moved into Bermuda in recent years is not responsible for creating or sustaining a soft market, a representative of a Bermuda insurers and reinsurers trade group said here.
Bradley Kading, president and executive director of the Association of Bermuda Insurers & Reinsurers, aired that view during a joint luncheon of the Association of Professional Insurance Women and the Insurance Brokers Association of the State of New York.
Responding to a question, he said, “If you look at Bermuda companies you’ll see record amounts of stock buybacks authorized during the current calendar year.
“In other words, the money they’re making from profitable insurance results is going back to shareholders. It’s not contributing to the downward spiral.”
Mr. Kading’s view got support from a rating agency report published by New York-based Standard & Poor’s on the same day, with S&P noting that a group of 23 Bermuda companies bought back $2.7 billion of their shares–roughly 3.7 percent of shareholder’s equity as of Sept. 30.
S&P cited “prudent capital management” strategies as one factor supporting its view that ratings will remain stable for the next six months, at least–even as the market softens.
S&P also highlighting enhanced enterprise risk management processes and disciplined underwriting as factors supported its “cautiously optimistic” view.
The report titled “Will The Good Times Last for Bermudian Re/Insurers?” said the group’s shareholder’s equity had jumped to $72 billion as of Sept. 30 on the heels of record profits, and that the companies still have about $3.4 billion (4.7 percent of shareholder’s equity) under existing share-repurchase authorizations.
Mr. Kading of APIW reviewed statistics suggesting that Bermuda reinsurers have a dominant share of the global market and he described benefits of a Bermuda domicile–mentioning a supportive government and the ability to collaborate with capital markets participants there.
He also presented a list of issues that threaten “sustainability of the Bermuda edge,” including issues related infrastructure constraints, housing, transportation and educational issues.
Two executives from ABIR member companies went on to describe cooperative efforts of Bermuda insurers and the government aimed at educating Bermuda citizens about insurance.
The two executives–Allison Towlson, senior vice president and regional executive for ACE Bermuda Insurance, Ltd., and Sherron Williams, senior vice president of professional lines for XL Insurance Ltd.–both Bermudians, described their career paths and shared details of various scholarship, internship and mentoring programs in place at their companies.
“Why are we doing this?” asked XL’s Ms. Williams. “There are a number of reasons, but one is to be a good corporate Bermuda citizen,” she said, using a phrase the local government uses to identify companies with initiatives to attract, recruit and train Bermudians.
Such companies are rewarded by the government with smooth immigration processes for expatriate workers and related incentives, she said.
Although there have been recent media reports in Bermuda’s Royal Gazette and several U.K. reinsurance publications suggesting that work permit time limits and delays have frustrated unnamed insurance executives so much that they may pack up and leave the island, Mr. Kading told NU that ABIR members are not among them.
“The government is committed to resolving work permit issues in a timely fashion,” he said, adding that companies with certain talent requirements are given exemptions to the six-year limits.
He confirmed that the government recently floated an idea to put three year terms on permits and tie them to three-year training programs for Bermudians who would replace expatriate workers when permits expire. “I think the way to think about that is that it’s part of job training–it’s part of everybody’s interest in having apprenticeship[s] and in building the local talent pool.”
“So I’m not sure that we’ll ever see it in legislation. It’s really just to crystallize the way we’re all trying to develop local talent.”