NU Online News Service, April 2, 1:58 p.m. EDT
Bermuda has launched an effort called Bermuda First to help jump-start the island's economy in light of the global financial crisis, said the co-chairman of the initiative.
Part of that effort, it was explained, involves developing a strategy to address accusations that the island serves as a tax haven for insurers and other firms.
Ariel Reinsurance Chief Executive Officer Don Kramer, in Bermuda, said the government is heading the initiative. Other co-chairs with Mr. Kramer are Ewart Brown, Ph.D., Premier of Bermuda and Kim Swan, opposition leader.
Mr. Kramer said there are about 60 members in the initiative, "across the entire spectrum of Bermuda's community–social, restaurants, tourism, social welfare, all are participating." He added, "Politics have been pulled out of this and it's strictly bi-partisan."
As part of the initiative, the New York-based consulting firm McKinsey & Company has been hired to analyze Bermuda's economy and develop a variety of strategies to deal with the impending financial crisis.
"For example, on the financial side, the G-20 as well as the U.S. have targeted what they call tax havens," he said. "Bermuda is doing everything it can to deal with that issue of being called a tax haven, when in fact, Bermuda is conservative in many respects and is not an offshore tax haven, where money laundering is going through."
The Minister of Finance has signed treaties with a number of G-20 members insuring transparency, he said.
This week the Bermuda Monetary Authority (BMA) said as the "Bermuda market weathers the financial crisis, the Authority remains focused on an important medium-term goal: establishing the BMA as a leading risk-based financial regulator through a program which ensures Bermuda's regulatory framework is recognized as equivalent by other key jurisdictions."
The BMA said Bermuda is already in a strong position, and has had favorable assessments of its regulatory framework for insurance, banking and securities.
Bermuda's insurance community, Mr. Kramer said, is backing the Bermuda Monetary Authority effort to come up with "transparent and globally respected regulation so that Bermuda will be considered an effectively regulated jurisdiction."
He noted that while the insurance industry has grown dramatically in Bermuda, "there is a consolidation going on. That's going to lead to flat, possibly lower employment."
Because there are no capital markets, he said, companies are now doing share-for-share exchanges.
Aspen, he related, is going to issue common stock at less than book value, "in order to tender for its preferred stock."
"And you take XL, which was on the ropes, suddenly announcing that it tendered successfully for some 67 percent of its preferred stock. In so doing, it will generate a $220 million gain. That's the first good news they've had in a while," he commented.
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