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(CNS Business): Following taunting remarks by Premier McKeeva Bush last week that the Cayman Islands would win Bermuda’s insurance market, Bermuda’s Premier Paula Cox has punched back, saying, “Only the naive would be foolish enough to count Bermuda out,” and that Bermudians were "fearless in representing our national interest" but "principles-based". She said it was unlikely that Cayman’s initiative would represent a serious threat to Bermuda’s existing reinsurance market in the short term. Bermuda was known as the risk capital of the world and was working to extend its lead while Cayman was trying to close the gap, she said, noting that the island also took measures to include Bermudians in economic success and to ensure international business felt welcomed.
Speaking to attendees at the 11th annual Insurance-Linked Securities Summit in Cayman last week, Bush said that Cayman could win over the insurance market and could do it “without the malice, without the inhibitions of race, without the inhibitions of transport”. He also goaded the rival jurisdiction that, “My rating is still AA3 rating – what is theirs?” (a reference to the downgrade of Bermuda’s sovereign credit rating last year to AA-).
Premier Cox responded yesterday, “Our government does not and has never rested on its laurels, but constantly seeks to press the envelope and to march relentlessly forward. Only the naïve would be foolish enough to count Bermuda out. You cannot seriously hope to operate a credible, successful, premier international centre without being reputationally sound and intellectually nimble and innovative. That continues to be a hallmark of our success.”
The Premier continued, “Bermuda is focused on extending its lead, while Cayman speaks about closing the gap. Our destination is far beyond our borders and we have the infrastructure and the talent to make it happen. It should be pointed out that Bermuda continues to introduce initiatives to ensure that we include Bermudians in the path for success of our jurisdiction. Yet, we do not take our reputation for granted nor do we rely on past successes. So we work tirelessly and continuously.
“We focus on strategic alliances with our business partners. In this way we enhance our enviable reputation by strengthening our relationships with the European Union, UK and US jurisdictions. And by strengthening our regulations to satisfy the global regulatory agencies, and enacting business-friendly legislation, then it is unlikely that this initiative will represent a serious threat to Bermuda’s existing reinsurance market in the short term."
She said the Bermuda marketplace was known globally as a centre of excellence in the area of reinsurance underwriting. "Advances in the technical pricing of risk; the creation of alternative forms of capital such as sidecars, regulatory innovation; and a series of other developments including strong sovereign ratings; have combined to make Bermuda one of the top three reinsurance centres of the world. We are known as the risk capital of the world.
“Additionally, the credibility of our jurisdiction is reflected in the strength of its international relationships with those organisations that are shaping the future course of the reinsurance industry. Thanks to such connections, Bermuda plays a leadership role in assisting with the development of the world’s risk industry.
Cox referred to a letter she had received from Ramon Fernandez, chairman of the Financial Stability Board (FSB) and Secretary of the Treasury, Ministry of Economy, Industry and Employment, for France about the FSB’s evaluation exercise relating to global adherence to international cooperation and information exchange standards’.
Fernandez wrote: “I am writing to inform you that Bermuda is one of the jurisdictions that was included in the initial pool for evaluation, since it ranks highly in financial importance. I am pleased to note that, according to publicly available information, Bermuda already demonstrates sufficiently strong adherence to international cooperation and information exchange standards and therefore, no further evaluation is necessary under the FSB’s current initiative.”
Premier Cox said, “This is high praise indeed for a small jurisdiction that manages to stand toe to toe with giants!” Bermuda has never adopted an isolationist position – quite the contrary. Instead, we favour collaboration and assistance, whether to help territories in need with technical support and in terms of disaster assistance. We do not adopt a selfish approach that: ‘now we are okay- let’s pull up the ladder’. That is why, as Vice Chair of the OECD Global Forum Steering Committee, we have acted as an advocate for others, specifically smaller island domiciles.
“However make no mistake we are fearless in representing our national interest and while we are principles-based, when we speak to businesses owners that are attracted to Bermuda because of what we have achieved, whether on Solvency II equivalence or our quality reputation, we do not hide our light under a bushel and encourage those businesses who seek to re-base here to know that they will be welcomed.
“We are principled, yet we will continue to be nimble and innovative in protecting Bermuda’s turf and our national interests and to demonstrate that to choose Bermuda is to make a wise choice for a domicile that is credible, reputationally sound and prudent.”
At the Cayman Captive Forum in December 2011 Bush said that capturing the re-insurance industry from Bermuda could net the Cayman Islands around as much in GDP as Cayman’s entire financial services industry currently contributes. He said the industry in Bermuda was in decline and that legislative changes about to be enacted would pave the way for commercial reinsurers to incorporate in the Cayman Islands. This country would then be well positioned to become the domicile of choice for starting a commercial reinsurer.
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