It has been a long time in coming but Bermuda is now well-perceived and accepted in the European market as a leading risk market, according to insurance veterans Michael Butt and John Charman.

The top AXIS Capital executives - Mr. Butt is board chairman while Mr. Charman is president and CEO - spoke with The Royal Gazette yesterday after returning to the Island from several weeks spent in Europe separately attending business meeting and industry events in France, Switzerland and Monaco, including the high-profile reinsurance congress ‘Rendez-vous de Septembre' staged each year in Monte Carlo.

Both remarked that a once-sceptical perception of Bermuda and its re/insurers has been migrated to a widely-held attitude of acceptance that has paid off lucratively with exponential growth in business in the last five years.

“There is a significant difference between 11 years ago when the group of ‘92 (the property-catastrophe reinsurers that set up on the Island after a the capacity crunch from Hurricane Andrew) started and today in the European perception of Bermuda.

“In 1992 and 1993 we had a really uphill task getting Bermudians accepted. There was deep scepticism about what Bermuda represented; perceptions that it was the worst of the capital model. It was perceived as an in-and-out capital. A make a quick buck and then you are away place,” said Mr. Butt, who was an XL Capital executive until he resigned in 2002 to become AXIS chairman.

Both Mr. Butt and Mr. Charman are well-placed to speak to a shift in European perceptions on the Island, with the former having been the driving force behind XL's expansion into continental Europe while the latter is a veteran of the Lloyd's of London market.

“People from Bermuda wanting to do business in Europe spent a lot of time selling Bermuda before they could sell the services of their companies,” Mr. Butt said.

But that effort, over time, paid off. “There is now an understanding of what Bermuda represents in terms of the quality of capital, and perhaps more importantly, the quality of the underwriters and their long-term commitment and their willingness to do business. If you look at the business flows from continental Europe in the last five years, I would think it has increased by multiples; four to five hundred percent.”

Mr. Butt attributed the change in investment to this “investment” made in Europe through the last ten years, as well, to some extent, “structural changes” in that market after some companies floundered financially.

He said this had led to “a more open approach” when buyers were looking for much-needed capacity.

Bermudian companies, including Partner Re and XL, moving into the European market also helped.

“That helped substantially; that was part of the strategy. It has an enormous amount to do with it as it shows commitment.”

“I was deeply involved in helping make one of them happen, (with XL). And we did the same thing when we sat down to form Axis, we hired the very best people and imbedded them in the heart of Europe.”

“You cannot have a colonial outlook,” Mr. Charman added.

Both Mr. Charman and Mr. Butt said volume of business had increased but the growth in diversity of business was also remarkable.

“It is also the diversity of the flow, it used to be all cat(astrophe). That attests to the skill set in Bermuda,” Mr. Charman said.

Mr. Charman pointed out that the Island was also able to make inroads relatively quickly: “Bermuda has pretty much achieved in the last 15 years as much as the London market has taken 300 years to achieve.”

He added: “Europe was very much a closed marketplace and had been for the previous 100 years. As the global trading opened, so has Europe's perception and acceptance of global trade. Part of that is obviously of Bermuda as a global marketplace.”

Mr. Butt said that one person waving the Bermuda flag early on had been former Partner Re CEO Herbert Haag, himself a European.

“There were investments by people like Herbert Haag and others in developing a better understanding the solidity of Bermuda.”

Mr. Butt said the fact that Europeans, including himself, were driving the effort got the desired attention, not least because they could “to an extent, disown the concept of American capital being opportunistic”.

“By five years ago the deep perception had moved to a willingness to listen but still a considerable nervousness by the major clients and brokers, particularly in France and Germany,” said Mr. Butt.

Fortunately for the Island attitudes can change, but Mr. Butt cautioned that the market cannot afford to be complacent in what it has achieved.

“Bermuda is viewed as a high quality (jurisdiction), but there is no doubt that success brings responsibility. There is no doubt that Bermuda has been successful. And with it we now have to be extraordinarily protective of our reputation. Reputations, in this case, take 15 years to build and they can be destroyed just like that. That means ensuring that quality capital and quality underwriters only are allowed in, i.e. no cowboys please. And it means the political and judicial stability of the Island and its perception externally is very important because we have competitors around the world who are just waiting to eat us up, and will use any destabilisation to our disadvantage.”

Mr. Charman said the continued partnership between Government and commercial interests was critical. Mr. Butt said this was something that was well-established: “It works.”

Both agreed that Bermuda business stakeholders presented a strongly united front including in effectively lobbying foreign governments when the need arose to protect the Island's image as well as to make sure the role Bermuda plays as a risk market is understood.

“From a communication point of view with foreign governments and agencies, I think it is the criticality that Bermuda now plays in the global marketplace. Bermuda has firmly established a beachhead in the global insurance and reinsurance industry. And I think there has to be a greater awareness amongst foreign government and agencies of the strategic role that Bermudian companies have in continuing to oil the wheels of the global economy. That is what keeps the global economy that cannot be ignored,” Mr. Charman said.

As an example of how Bermuda has become “a centre of capital that cannot be ignored,” Mr. Butt said he was speaking on the eve of joining a meeting of financial minds, the ‘Group of 30', in Washington D.C. on systemic risk within the financial system.

“Now why am I going? Because Bermuda is seen as a centre for capital. And to make that analysis requires the input of Bermuda. That is, if you like a confirmation of the perception of our role and importance now in the world economy.”

“We are part of the debate on how to make the world economy and spreading of risk more sensible; make the world a safer place.”

Mr. Charman said: “Bermuda has moved from (being) a number of very successful businesses to now firmly establishing itself as a global marketplace and establishing itself as a centre of excellence for insurance and reinsurance. And that has happened since 2001. That is the real big step.”

Although Mr. Butt said there would always be a small group of people sceptical of Bermuda, but said the overwhelming majority no longer were.

“Most in Europe accept the quality and long-term commitment of Bermuda capital,” he said.

As an example of that, Mr. Butt said on a recent trip to Paris he had participated on a panel at an industry event with one of the largest buyers of reinsurance in the French market, who during the event said that his scepticism towards Bermuda had changed totally and that he was now appreciative of the fact of the capital in Bermuda had enabled his company to continue to buy, when capacity was not available, to continue to buy quality capacity and he was now fully committed to doing business with the main Bermuda companies to the advantage of his own business. That was a statement to the top 350 executives in the French market from one of the largest buyers,” he said, adding: “You could not ask for a better endorsement.”

“Without a doubt the scepticism has been reduced with the larger groups. The European marketplace has a few large companies, some mid-size companies and a large number of small mutual companies. The small mutuals are significantly less informed on the Bermuda marketplace. There is a different communications challenge with those clients; more of an educational process. We still have work to do there, work is never finished,” said Mr. Butt.

“It is a symbiotic relationship. Our success depends on the perception of the Island and the perception of the Island depends upon our success as a group. “This is a state of progress; it is significantly improved, but there is still work to do,” concluded Mr. Butt.

And, what is next? Mr. Butt said a similar effort to the long crusade in Europe was now being started to ensure that Asian buyers know what the Bermuda market has to offer.

“Both John and I are going to Bangkok in the near future doing effectively what was done in Bermuda before, which is selling Bermuda as well as the capacity of our company. We are giving a talk on the perception of Bermuda for the last ten years and what is future is,” he said.