Bermuda’s international re/insurance industry headlines continue to increase — and amaze. Here are just a very few sample headlines of business activity in 2023 alone.

July 3: Catastrophe bond and related Insurance-linked securities (ILS) issuance has set second-quarter records, according to insurance news and insights platform Artemis.bm.

July 14: US investment giant Fidelity Investments has formed a Bermuda-based reinsurance subsidiary to focus on US retail fixed annuities and pension transfer opportunities as the Bermuda long term reinsurance sector continues to grow.

July 17: Soteria Reinsurance Ltd was registered as a Class C insurer by the Bermuda Monetary Authority in June, along with two special purpose insurers and two intermediaries, bringing the total number of new insurance entities to 37 for 2023.

May 2: Fortitude Reinsurance Company Ltd today announced the signing of a $28 billion reinsurance agreement with The Lincoln National Life Insurance Company, a subsidiary of Lincoln National Corporation and its affiliates.

July 11: Florida’s Citizens Property Insurance Corporation completed the placement of its 2023 risk transfer programme, both within the US and Bermuda reinsurance markets and related businesses: Everest Re, Lancashire, PartnerRe, Hannover Re, SiriusPoint, Ascot Bermuda, Aeolus, Longtail Re (Stoneridge), and Nephila Capital among them.

Today, Bermuda is the largest supplier of catastrophe reinsurance to US insurers.

Another astonishing reinsurance fact relates to mortgage indemnity reinsurance. The United States has the largest global mortgage market dominated by government-sponsored enterprises (GSEs), Freddie Mac and Fannie Mae, whose primary function is to provide liquidity and stability to the nations’ mortgage finance system.

Since 2014, under mandate from the Federal Housing Finance Agency (FHFA) to reduce US taxpayer risk, the GSEs transfer credit risk to capital and reinsurance markets via their credit risk transfer programmes.

As at May 2021, more than 50 per cent of US mortgage reinsurance was backed by Bermuda’s reinsurance market. According to the Association of Bermuda Insurers and Reinsurers (ABIR): “Bermuda-based global carriers are providing innovative mortgage solutions that are helping more and more Americans become homeowners. Reinsurance companies on the island provided increased capacity to US monoline private mortgage insurers in recent years, upping their share of all-important reinsurance support from just under 30 per cent in 2016 to over 50 per cent in 2020.”

Bermuda, as we are all probably aware by now, is a cross-border financial centre whose major industry is the international business of risk management.

A recent detailed analysis by the Bank for International Settlements (BIS), The Outsize Role of Cross-Border Financial Centres 2022, by Pamela Pogliani, Goetz von Peter and Philip Wooldridge, reiterated the centres’ growth with some very interesting statistics. I encourages readers to peruse this well documented analysis to understand further Bermuda’s significant place in international financial intermediation.

The BIS’s mission is to support central banks' pursuit of monetary and financial stability through international cooperation, and to act as a bank for central banks. BIS provides a forum for dialogue and broad international cooperation; a platform for responsible innovation and knowledge-sharing; in-depth analysis and insights on core policy issues and sound and competitive financial services.

BIS Members are the central banks of 63 jurisdictions: 34 in Europe, 16 in Asia, five in South America, three in North America, three in Africa, and two in Oceania.

The United States is represented by two members, the United States Federal Reserve System and Federal Reserve Bank of New York. The Central Bank of Russia is a member, but its engagement with the BIS has been suspended since early March 2022 due to Russia’s invasion of Ukraine.

Among the article’s findings are:

• Financial centres that specialise in cross-border activity have become an entrenched feature of the global financial system

• They are defined as “countries with banking sectors dealing primarily with non-residents and/or in foreign currency on a scale out of proportion to the size of the host economy“

• Not all international financial centres are alike due to size of international business relative to total economic activity, some have grown much larger

• They are successful in attracting international business and are not marginal players

• The rapid growth of cross-border centres, as well as the financial integration of emerging market economies, has contributed to a more diverse geographic distribution of external positions

Prominent characteristics of cross-border centres include:

• A diverse set of market participants

• A pool of financial experts attracts more experts, thus promoting specialisation and agglomeration effects

• Financial centres closer to customers

• Stable, transparent legal environment for predictability of contractual terms and effective dispute resolutions.

When considering basic factors influencing foreign direct investment in a country, Bermuda possesses these attributes.

• Stability of the Government: check

• Flexibility in government policy: check

• Pro-active measures by the government to promote investment (infrastructure): check

• Exchange rate stability: check

• Tax policies and concessions: check

• Scope of the market: check

• Other favourable location factors (including logistics and labor): check

• Return on investment: check

One sentence stands out in all of the above.

Whenever you have a diverse set of market participants, innovation of excellence, and diversification of product and choices, it does benefit consumers in lower costs and more protection.

Bermuda, as a major cross-border financial centre, continues its amazing growth as the domicile of choice for the management of risk.

Bermuda is still truly in the eye of all trade!

Need I write more?

Martha Harris Myron recent presented “An Overview of the Cross-Border Financial Centre of Bermuda” to visiting assistant professor of law Cheryl Packwood’s law class at Albany Law School for her course on international business transactions.

• Martha Harris Myron is a native Bermuda islander with US connections, a presenter, author, finance columnist, YouTube creator and a former international financial planner with a Master of Laws in International Taxation and Financial services. Further information contact: martha.myron@gmail.com