THE BSX:
GROWING WITH EVERY YEAR
The Bermuda Stock Exchange continues to develop with leaps and bounds as the exchange captures an increasing share of the global ILS market, as Greg Wojciechowski reports.
W 34 Bermuda Finance | 2014
hen Bermuda started to streamline the process for companies to set up and list insurance-linked securities (ILS) in 2009, we had no idea that in 2014 the Bermuda Stock Exchange (BSX) would break its own record and
see more than $10 billion in ILS, including catastrophe bonds, listed on the exchange. We are now at $13.5 billion and growing.
Since 2009, Bermuda has been positioning itself to be the jurisdiction of choice for the setting up, listing and servicing of ILS vehicles since making amendments to its Insurance Act which slashed red tape and later reduced the set-up fees.
From a standing start that year, when the Bermuda Monetary Authority (BMA) changed the laws to make the incorporation of special purpose vehicles to set up ILS much easier, Bermuda has been quick to get to the front of the line.
For a long time now we have been recognised as one of the top three reinsurance centres in the world and the companies that are set up
in Bermuda have enjoyed a commercial culture that has always been adaptable and at the forefront of market change and innovation— something that has given them the leading edge.
When we saw growing interest in ILS from investors, insurers and reinsurers, as a jurisdiction we did all we could to make things operate more smoothly for both sides of the ILS equation. As a result, we have developed a ‘cottage industry’ in ILS that is thriving.
According to the latest Aon Benfi eld report issued in July, as of June 30, 2014, the total outstanding catastrophe bonds were at a record high of $22.4 billion, and the broker said that cat bond issuance for the fi rst half of the year was the highest on record. If this trend continues, Aon Benfi eld confi dently predicts that ILS issuance could surpass the annual market peak set in 2007, before the fi nancial crash.
The sustained deployment of additional investor capital into ILS vehicles has been refl ected in the number of special purpose insurers
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