Islamic Banking gif
Cheryl Packwood, Chief Executive Officer of Business Bermuda
What investment opportunities do you currently find significant?
What interests us in Bermuda are the op- portunities that are being created as the Islamic finance industry continues to grow internationally.
Whether it is in fund management, insur- ance, re-insurance or sukuk, as Islamic finance becomes a worldwide industry, international domiciles like Bermuda can play a role in helping to ensure that this development of these structures is trans- parent, well-regulated and cost-efficient.
Why Bermuda has all the ingredients necessary to be an offshore leader in capital markets?
We have a strong track record in provid- ing a cost-efficient domicile with the in- frastructure and human resources that institutions need to be successful. As the world places a greater focus than ever on transparency and quality of regulation, our long-term focus on these values places us in a strong position.
What does the future hold for business in Bermuda?
The international markets where Islamic finance is strongest – such as the Middle East, Asia and Africa – are all continuing to expand at a time when the US and Europe have seen their economies slow.
As these emerging markets continue to drive global economic expansion, we in Bermuda are excited about the role we will play as an off-shore domicile as inter- national Shariah-compliant funds, insur- ance and sukuk look to help finance this growth.
pany. The GE Sukuk was acclaimed as the “Sukuk Deal of the Year” for 2009 by Islamic Finance News as well as “Deal of the Year” for 2009 by Airfinance Journal which further highlighted Bermuda’s scope for Su- kuk investments. Bermuda is the primary jurisdiction for Sukuk issuances especially those that are backed by aircraft, due to its leading position as the offshore domicile of choice for aircraft registration and finance. In addition Bermuda has taken an important move towards positioning itself effectively as the offshore jurisdiction of preferred choice for Islamic finance investments in the Mid- dle East after entering into a double taxation agreement with Bahrain.
Due to Bermuda’s impressive environment for Sukuk issuances it makes it the perfect investors abode for lucrative investment op- portunities within the country and globally. Figure 4 shows the key benefits of using Ber- muda SPVs for structuring Sukuk and other Shariah-compliant structured products.
Takaful and Retakaful Bermuda is centred as the perfect location for Takaful and Retakaful opportunities in the Islamic finance sector and is working progressively to ensure that these two sec- tors are successfully implemented and used within the country. Bermuda has made sig- nificant contributions to the Takaful and Re- takaful sectors and are specialising in these areas of Islamic finance within the country. Bermuda has already earned its place as the largest offshorereinsurance and insur- ancedomicile in the world which provides investors and business professionals with the ultimate platform to tap into the Shariah compliant Takaful insurance sector.
The law in Bermuda has made it easy for structured Takaful products such as Mudarabah, Wakala and hybrid models of Takaful which can be structured under Ber- mudan law quite easily. The easy jurisdiction in Bermuda has made it the prime location especially for Takaful.
According to Christopher Dye, corporate le- gal counsel for BCB Charter Corporate Serv- ices : “Bermuda special purpose vehicles (SPVs) are used for a wide range of transac- tions including; insurance, investment and asset leasing. One example of tailor made Bermuda legislation for SPVs is the special purpose insurance license. “Special purpose insurers, which fully fund their liabilities in a manner approved by the Bermuda Mon- etary Authority (BMA), can obtain a special purpose license which exempts them from certain regulatory requirements of other in- surers.”
Bermuda is centred in the world’s top three destinations for offshore insurance and
reinsurance and has the necessary infra- structure already in place to support Takaful and retakaful providers. The advantages of Takaful in Bermuda is that is has the frame- works in place for all forms of accounting, auditing and legal fund administration ex- pertise which make it attractive to insurers worldwide.
The incorporation of Takaful and retakaful providers helps to offer more to customers and closes the gap in the market. As Ber- muda has an attractive strategic location, it can give Takaful and retakaful providers a higher advantage in supporting their ef- forts to market to the US and Europe, where insurance penetration rates are considered higher in comparison to other parts of the world where Takaful is still in its infancy.
In addition to the company formation re- quirements, a local insurance manager is required and Bermuda is centred with the advantage that it has representation from several global firms which offer internal and international resources, including ones from the successful GCC market, which can facili- tate the unique needs of Takaful and retaka- ful providers in Bermuda.
Bermuda’s thriving Takaful sector is one that is admired by many Islamic finance hubs around the world and is a prime location for the emergence of Takaful and Retakaful pro- viders who want to set up business opportu- nities in Bermuda.
Islamic Investment Funds in Bermuda Sector of Islamic investment funds in Ber- muda is growing in popularity and is man- aged under the Investment Funds Act. Is- lamic investment in Bermuda is based on a well-tested legal and regulatory environment founded on English law, a regime that is com- monly the legal system of choice for Islamic financial products. This gives the investor better scope for making Shariah compliant investments in the country and he potential to get lucrative profits.
Under the regulations of Bermuda Islamic funds it is considered that an Islamic fund can adopt a secondary name in Arabic with the approval of the Registrar ofCompanies. This is highly advantageous for the investors as Bermudahas an edge over other offshore jurisdictions because investment managers planning on launching an Islamic fund can call upon a stream of local fund managers and administrators.
The solid jurisdiction and regulatory environ- ment that is principles-based in Bermuda and works in favour of Islamic funds will help any investor in investing in Shariah compli- ant funds in the country. Andreas Jobst, Ber- muda Monetary Authority (BMA)explained
2012 May Global Islamic Finance 45
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