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September 2012 Bermuda Re/insurance
The change in legislation came about after Bermuda recognised a need from its insurers and reinsurers to streamline the process of setting up ILS. In October 2009, Bermuda legislation changed to make it easier to set up SPIs, which are used to set up catastrophe bonds and sidecars.
At the BSX, what we see are mostly listings of catastrophe bonds, but these are only the tip of the iceberg when it comes to the ILS space in Bermuda.
Apart from catastrophe bonds which choose to list on the BSX, there are other ILS instruments such as industry loss warranties (ILW), sidecars and collateralised plays, much of which are placed privately and attract very little publicity.
Bermuda entered the ILS space from almost a standing start in 2009 as a result of the new legislation, which was spearheaded by the Bermuda Monetary Authority (BMA), to make it easier to set up SPIs. In March 2012, the BMA announced it was halving the registration fees for SPIs, reducing the registration fee from $11,600 to $6,000 from April 1 this year.
According to the BMA, in 2009, one SPI was formed, in 2010 eight, in 2011 23, and so far in 2012, 13 have formed including:
Blue Water Re Ltd
PartnerRe Catastrophe Fund Ltd Queen Street V Re Ltd Arden Indemnity Ltd
January 17 January 23 February 3 March 28
“Over the five years ending in 2011, the Swiss Re Global Cat Bond Performance Index posted a return of 9.09 percent—excellent in the context of today’s market.”
Everglades Re Ltd
AlphaCat Re 2012, Ltd Pendulum Re II Ltd Orange Grove Re Ltd
Timicuan Reinsurance III Ltd Pangaea Reinsurance IV Ltd
April 2 May 15 May 23 May 25 May 28 May 28
While we feel that 2011 was the year that Bermuda made its mark and solidified its position as a leader in servicing ILS structures, 2012 has been a great year both for Bermuda as a jurisdiction and the BSX, as well as for the ILS space in general.
Already there has been speculation that there will be between $5 and $7 billion of issuance in 2012. If the number goes over $5 billion, it will be the first time since 2007 that this has happened.
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