Bermuda is well placed to benefit from its credibility as a well-regulated international reinsurance hub when companies look to capitalise on laws in US states regarding the definition of certified reinsurer.
That is the opinion of Jim Naumovski, senior legal counsel, RGA International, speaking at the Bermuda Captive Conference held in Bermuda this week (Monday June 8 to Wednesday June 10).
RGA redomiciled its subsidiary RGA Americas Reinsurance Company to Bermuda from Barbados in September last year to benefit from new laws in Missouri that allow a certified reinsurer to post less than 100 percent collateral and still qualify for full reserve credit with respect to reinsurance contracts renewed or entered into, on or after January 1, 2014, or the date the reinsurer becomes certified.
RGA Americas accepts direct business and provides retrocession for general and long-term insurance business from both affiliated and non-affiliated companies.
To qualify as a certified reinsurer, however, the entity in question must fulfil a number of criteria. These include minimum capital requirements, two ratings and an operating history of at least three years. Finally, it must be domiciled in a location with an approved regulatory regime, one of which is Bermuda.
“We could have chosen a number of locations including Switzerland, Germany of London but we went for Bermuda for a few reasons,” Naumovski said. “We are familiar with Bermuda – we have other operations here. We like the infrastructure, the time zone and the business culture here. We also like the regulatory regime – we find it easy to work with. We were comfortable with the decision.”
He also stressed that the move should not be regarded as a negative on Barbados. “We have other operations there which we are very happy with but we needed a certified reinsurer,” he said.
Speaking in the same session, Shelby Weldon, director, insurance licensing and authorisation, Bermuda Monetary Authority, added that from the regulator’s perspective, when dealing with instances of companies looking to redomicile the authority's approach considers whether policyholders will be protected and if there is a reputational risk to Bermuda with a company moving there.
“Those are the two considerations that frame every decision we make,” he said.
Mark Allitt, senior manager, KPMG, added that any company considering such a move needed to plan properly and ensure that the regulatory regimes in both jurisdictions allow such a move to happen as a continuation, in the way RGA managed it. This is not always the case, he said.
“Bermuda has good regulation that allows continuance both for entities wishing to move to and leave Bermuda but that is not always the case. I have worked with clients wanting to move from Ireland to Bermuda. While Ireland has regulation enabling incoming entities, the same is not in place to allow companies to leave.
“That meant continuance was not an option and other options need to be explored.”
Bermuda Captive Conference, Jim Naumovski, Bermuda, RGA International, North America, Shelby Weldon, BMA