Hartford-based Conning Research and Consulting, Inc. notes in a new study that “Bermuda has become the place where the capital markets and the market for insurance and reinsurance talent most closely intersect.”
“In the past 20 years, Bermuda has grown from a small haven for captives to a thriving center of insurance, and especially reinsurance,” stated Stephan Christiansen, Conning’s director of research. “By 2004, Bermuda accounted for nearly 12 percent of the unaffiliated reinsurance ceded from the U.S. market, worth $8 billion, up from just over 9 percent, or $7.1 billion in 2003.”
The Conning Research study, “Bermuda: The New Capital of Insurance?” reviews this growth, identifies the key characteristics of the Bermuda model, and analyzes the growth opportunities for Bermuda insurers and reinsurers as well as the threats to Bermuda’s prominence.
It found that “Bermuda’s growth has accelerated, with a significant portion of the nearly $25 billion in new capital raised for the insurance industry in the past year going to Bermuda. Swift and efficient allocation of capital is at the core of the Bermuda insurance model, and it became even more efficient with the Class of 2005 and the increasing influence of hedge funds.”
“We expect record earnings for Bermuda in 2006-as much as $10 billion or more in net income, thanks to a relatively benign hurricane season,” Christiansen added. “This will help propel the Bermuda model continue to innovate in risk transfer efficiency with increased usage of capital markets mechanisms such as catastrophe bonds, sidecar reinsurers, and industry loss warrants.”
“Bermuda: The New Capital of Insurance?” is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company’s web site at: www.conningresearch.com.
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