Cayman Islands will win Bermuda’s insurance market and can do it “without the malice, without the inhibitions of race, without the inhibitions of transport”.That is the sentiment communicated by Cayman’s Premier McKeeva Bush to attendees at the 11th annual Insurance-Linked Securities Summit in Cayman last week.Last night, Premier Paula Cox responded to his comments by stating that 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 added that Bermuda favoured collaboration with others, as part of the international community, rather than adopting an isolationist approach. The Island also took measures to include Bermudians in economic success and to ensure international business felt welcomed, she added.“In the mid Atlantic they say they ‘may’ reduce some fees; we have reduced fees,” said Premier Bush. “They are still talking about their immigration policy and make long statements, but I say this boldly while Bermuda has been the champion, be assured that we can grow. We here can do it without the malice, without the inhibitions of race, without the inhibitions of transport.”He added: “My rating is still AA3 rating what is theirs?” Last year S&P downgraded Bermuda’s sovereign credit rating to AA-.Premier Bush has thrown down the gauntlet to Bermuda before, most recently in December at the Cayman Captive Forum when he said his domicile had more favourable immigration laws and land ownership policies.Premier Cox responded: “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; 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.”Premier Bush’s thoughts were backed by Jeff Mulholland, managing director and head of insurance and pension solutions for the Americas with Societe Generale, a large French bank, who gave conference attendees his predictions for Bermuda’s insurance industry.“Over the next two years we are going to see a lot of business which has historically been in Bermuda pick and leave to come here and it’s already begun,” CNS Business quoted Mr Mulholland as saying. “My prediction is: buy Cayman real estate.”Mr Mulholland said Bermuda’s endeavour to meet Solvency II requirements makes domiciling in Cayman more attractive.“This is important because by kowtowing to the Europeans effectively Bermuda has just made itself obsolete,” he said. “I think it was a huge miscalculation by the Bermudian government.” The article adds that Solvency II compliance would be a “huge problem” for Bermuda over the next ten years.“In the advisory work we do right now this is not a controversial statement,” said Mr Mulholland. “This is a majority view and a view that has changed over the last year.”Cayman’s Stock Exchange chairman Anthony Travers also got into the discussion, stating: “Speaker Jeff Mulholland highlighted in addition a further distinction because Bermuda has introduced the European-inspired Solvency II regulations, which have a politically motivated capital requirement which has not been introduced in Cayman. This will favour the probable migration of reinsurance companies from Bermuda to the Cayman Islands.”Bermuda has pursued “third-country equivalence” with the European Union’s new Solvency II regulations to ensure that the Island’s global re/insurers will not be competitively disadvantaged in the European marketplace.A major concern surrounded Bermuda’s world-leading captive insurance sector and whether equivalence would mean captives being subjected to the same increased capital requirements as commercial insurers.However, the Europeans have indicated that they are likely to be prepared to treat captives differently, since captives chiefly insure the risks of their own parent corporations, and therefore have a lower risk profile than companies which write third-party business.Premier Cox said: “Only the naive 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.”She added that Bermuda was known globally as a centre of excellence in the insurance industry.“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,” she said.“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.”Bermuda wanted to play an active part in the international community, she added.“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.Ms 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’.Mr 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!”