BMA’s Cox: Bermuda demonised’ in Europe
Bermuda and other international financial centres are “routinely attacked and demonised” in Europe, according to Bermuda’s top financial regulator.
Jeremy Cox, chief executive officer of the Bermuda Monetary Authority, said in opening remarks in the BMA’s Business Plan 2015, published today, that it was “time for Europe and Bermuda to decide whether their relationship can ever be one built on mutual trust and understanding”.
Mr Cox was speaking as the BMA prepares its final push to gain “third-country equivalence” with the European Union’s Solvency II insurance regulations, which are scheduled to take effect at the start of 2016.
The BMA also today hinted at an expansion of its role to include helping Government to work on fiscal stability and to increase understanding of the Island’s role in the global economy.
In the Business Plan document, Mr Cox said the BMA found itself at a crossroads.
“So why do I believe we are at a crossroads?” he said. “The answer, quite simply, is that despite a massive investment on our part in framework revisions which not only work for Bermuda but are designed to secure support from Europe, we are still fighting for survival in a world in which international financial centres such as Bermuda are routinely attacked and demonised.
“For the past 30 years, Bermuda has played a major role in furthering the risk-shifting capabilities of Europe’s developed economies.
“Billions of dollars of risk have been moved from Europe’s balance sheet to Bermuda’s. Billions of dollars in claims have been paid to European policyholders.
“Yet we are still treated with suspicion. We still hear the mantra: Offshore financial centres are a threat to our economies.
“I believe it is time for Europe and Bermuda to decide whether their relationship can ever be one built on mutual trust and understanding.”
Bermuda had left no question about its “unreserved commitment” to meeting Solvency II equivalence standards, Mr Cox said, but the question remained over what the relationship with Europe would look like after equivalence.
“In what is likely to become a post-equivalent environment in the first quarter of 2016, the challenge for the BMA will be to decide whether we have friends and colleagues in Brussels and London or whether we should simply assume the worst and recognise this will always be a strained and uneasy relationship at best and a hostile one at worst.”
The BMA wanted and needed “sensible working relationships” with counterparties around the world, he added.
Solvency II equivalence would ensure that Bermuda-based international insurers are not put at a competitive disadvantage when doing business in the European Union.
The BMA has campaigned hard in Europe for the captive sector — with its lower risk profile — not to be subject to the same stringent standards of oversight as commercial third-party insurers under the Solvency II equivalence regime.
Separately, in an executive briefing at the Fairmont Hamilton Princess, Mr Cox told a business audience that in 2015, the Authority would become “more closely identified with the Bermuda Team”.
“This will mean working alongside the Bermuda Business Development Agency (BDA), the Finance Ministry and the Economic Development Ministry,” Mr Cox said.
“It will mean the Authority becoming more involved in helping the Government develop Bermuda’s fiscal policies.
“We must come together, we must come together now, and we must develop a more cohesive and better coordinated strategy that puts Bermuda in a position to win.”
Mr Cox said that as the BMA completes international equivalence exercises this year, its challenge will be to adopt an approach that is simultaneously both conservative and radical.
“Conservative in order to preserve the gains and progress of the past, holding to the best while continuing to deliver on prior promises and undertakings, and radical enough to cope with and to lead change,” Mr Cox said.
Following his keynote address, Mr Cox took part in an expert panel discussion including Finance Minister Bob Richards, Economic Development Minister Grant Gibbons, Association of Bermuda International Companies chairman Patrick Tannock, and BDA CEO Ross Webber.
Premier Michael Dunkley also spoke at the event.
In conclusion, Mr Cox said: “In 2015 the Authority will remain committed to the wider jurisdictional effort to increase understanding about Bermuda’s vital role in the global financial services industry.
“Believe me, in the current global environment, this has never been a more important exercise.”
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