Seeking new markets
I am very bullish and super excited about the potential growth in the captives sector on Bermuda in the next couple of years. We have done a lot of legwork in the past couple of years and we are now starting to see the fruits of that emerge.
“I don’t want to jinx it, but I am very optimistic. Bermuda had a lot to offer anyway, but securing Solvency II equivalence was huge for us and gives us even more credibility.”
That is how Jereme Ramsay, business development manager at the Bermuda Business Development Agency (BDA), describes his sentiments towards the sector after a recent roadshow to Canada, which follows similar business trips there and to Latin America over the past 12 months.
Ramsay speaks from his wide experience, which spans financial services, in both asset management and retail banking. At HSBC, he oversaw strategic planning and marketing governance for retail and wealth management divisions, and was also e-sales manager. At the BDA, he is responsible for its risk solutions pillar and works with BDA reinsurance, insurance, captives, and insurance-linked securities sectors.
Recently back from a roadshow in Toronto, Ontario, Ramsay says he is very positive about the growing appetite for self-insurance and captives in the market and the understanding of what Bermuda has to offer in this space.
“THERE ARE OTHER BENEFITS THAT PEOPLE ALSO RECOGNISE, SUCH AS OUR ACCESS TO THE REINSURANCE MARKETS, ESPECIALLY FOR THOSE SEEKING EXCESS OF LOSS COVERAGE.”
“We met with risk managers and senior fi nancial executives from large firms including many energy companies,” he says. “We discussed the captive concept with them in terms of its advantages and also explained why Bermuda has many benefits.
“There is a lot of interest and it is gaining momentum. Business development is often not a quick process, but we are starting to reap the rewards of previous outreach and roadshows.”
This particular trip is effectively a follow-up to a roadshow that took place in May 2015.
“That was the first big push into Canada; it happened last year and we saw some new formations on the back of that. This one was a follow-up to touch base with some of the same people, but also to reach a slightly different audience,” Ramsay says.
Very healthy numbers of executives attended the sessions, which included officials from the BDA, the Bermuda Monetary Authority (BMA), several large captive managers including R&Q Quest and Liberty Mutual, as well as KPMG and law firm ASW.
“That depth of expertise allows us to paint a full picture of the process of forming a captive—the different classifications they can have,for example—and clearly answer any questions the audience may have,” he says.
“In particular, we are seeing a lot of interest from energy companies, and the expertise we have allows us to answer some of their very specific questions.”
He adds that an important advantage Bermuda has when speaking to companies in Canada is the tax information exchange agreement (TIEA) that has existed between the two countries since 2010. He explains that this makes trade much easier and that good relations have been further enhanced by government representatives of each country attending some of the roadshows.
“While much of our business has been coming from the US, we are focusing on Canada. We want companies there to keep Bermuda top of mind as opposed to other domiciles. Bermuda is the world captive leader and we need to make sure they understand Bermuda’s advantages.”
Latin America has also been a focal point for the BDA in recent years. In the past 18 months, delegates have visited Mexico, Colombia and Brazil on roadshows showcasing the benefits of captives and of Bermuda.
So far, the most lucrative trips have been to Colombia. As with Canada, a TIEA is in place with Bermuda, meaning the trade path between the two countries is smooth. On top of this, Colombia is home to some big companies already sophisticated in their risk management, so the connection has already started to reap rewards, with a number of captives formed on Bermuda as a result of these efforts.
Ramsay stresses BDA efforts to accommodate cultural sensitivities in different regions, including having Spanish and Portuguese industry speakers from Bermuda in the delegations. The BDA has an official Latin America industry working group comprising members with Hispanic backgrounds.
More trips are planned to the region in the coming months, with many trade missions preceded by webinars—some of which are held in Spanish—to allow delegates to get a taste of the captive concept before the Bermuda contingent arrives.
“It is all a process of education about the Bermuda market, and about captive insurance generally, and we have found it is vital to work in Spanish,” he says. “We are getting real traction in the area now because of this approach.”
Ramsay confirms companies in Colombia and Mexico have formed captives in Bermuda in the past year, prompted by the BDA’s outreach work, and another is due to be formed shortly—from a South American country where to date no company has formed a Bermuda captive previously.
“The pace of acceptance and action is faster in Latin America,” Ramsay says. “Canada is more conservative and decisions on formations tend to take a little longer, but the dialogue is there and progress is being made.
“The existence of tax agreements between countries is critical for us and very helpful. But there are other benefits that people also recognise, such as our access to the reinsurance markets, especially for those seeking excess of loss coverage.”
Another more recent benefit has been Bermuda’s securing equivalence with Solvency II. While this does not affect the regulation of captives directly, it gives Bermuda even greater credibility on the global stage in terms of its standards and reputation, putting the minds of executives considering the offshore captive option at ease.
“We are one of just two non-EU countries, along with Switzerland, to secure equivalence,” he says. “It gives us huge credibility and certainty to clients. When you combine that with the very high credit rating [A+ from S&P] we have from some of the rating agencies compared with other domiciles, it is a big plus point for companies wanting to work with us.”
Ramsay’s focus is not solely on Latin America and Canada when it comes to growth opportunities. He stresses that he also sees big potential thanks to the rapid changes that have taken place in the healthcare sector in the US.
As such, the BDA has also organised roadshows to target this sector with trips to Atlanta and North Carolina undertaken this spring, and to Chicago and Boston planned for later this year.
He explains that while there have been some mergers in the space—and between captives as a result—there are also many opportunities emerging as more large hospitals consider the self-insurance route while also requiring access to the reinsurance markets to establish excess of loss contracts.
“Bermuda offers a win-win situation for these organisations. Healthcare is a huge growth sector at the moment and we are seeing a lot of interest on the back of that.”
He stresses that this is one reason for a strong emphasis on the topic at the 12th annual Bermuda Captive Conference this year, with several sessions outlining topics and trends in this space.
Jereme Ramsay is a business development manager at the Bermuda Business Development Agency. For more information visit www.bda.bm