Bermuda outpaced London by nearly 10-1 last year as the domicile of choice for new share capital entering the reinsurance market.

Most people in Bermuda know that reinsurance is the industry equated most with international business on the island and therefore with the health of our economy. Further, everyone recognises that Bermuda is a growing business centre and is a key jurisdiction in the global market.

But where is Bermuda now and what will it take for Bermuda to continue to prosper?

From 2001, the reinsurance market in Bermuda has more than tripled in size to more than $28 billion in share capital and surplus. This impressive growth rate has been in response to the property catastrophe losses following the events of September 11, 2001 and the heightened storm seasons in 2005 and 2006.

Still, the Bermuda market is a mere baby, compared to that of London. Indeed, as Lord Levene, Chairman of Lloyd’s said in his speech last year to the Bermuda Society: “Of course, in Lloyd’s terms, Bermuda is still a new kid on the block—we go back to 1688. But since it emerged around 30 years ago, the Bermuda market has undergone a significant transformation. It has grown considerably in size and scale, and is now a major player on the international stage.”

While Bermuda is attracting new formations and new capitalisation, it is also becoming an increasingly attractive jurisdiction for existing reinsurers from other leading markets and most recently from London. Pundits on both sides of the Atlantic have identified London’s failings and Bermuda’s benefits as reasons for these moves. This does not, however, mean that Bermuda will always enjoy this edge over other jurisdictions.

London and Bermuda have a healthy competition and an important relationship. As two leading jurisdictions, Lord Levene said, “they each have their own strengths; and they both face a similar set of challenges as the global marketplace continues to evolve —yes, there is competition among us, but I welcome competition in the insurance market, wherever it is found. Businesses only get better when they are faced with real competition. To quote the old proverb: ‘competition is the whetstone of talent’, so long may it continue.”

In Bermuda’s case, ensuring that we have top insurance talent on the Island is vital if we are to remain globally competitive. However, it is not only insurance talent that is required to keep Bermuda on top. Legal, accounting and fiduciary services in Bermuda have long been recognised as contributing factors to Bermuda’s rise as well as a streamlined and effective regulatory framework.

The recent moves of existing businesses from London are exciting and are a validation of Bermuda’s global status but we should be careful not to take anything for granted.

If Bermuda was able to make such a significant impact on the global market in such a short period of time, it is surely possible that Bermuda could just as easily fall out of favour or be surpassed by other ‘younger’ jurisdictions.

Lord Levene certainly understands this, saying: “So what can the old pro that is London learn from the talented newcomer Bermuda? Quite simply, that we can never be complacent. We cannot assume that our future is safe just because we’ve been around for more than 300 years. Our industry is becoming increasingly competitive, customers are getting greater choice, and none of us have a God-given right to be here. To maintain our leading role in the insurance industry, we have to constantly adapt and change.”

Marketing experts would describe Bermuda’s growth as being part of a product life cycle - being introduction, growth, maturity and decline. Although more complex, a reinsurance jurisdiction is also a product and can be seen in this way, too.

If we become complacent, we might find one day that our status in the global marketplace is in decline <\m> but, at the moment, we are in the growth stage and I bet we still have a thing or two to teach the old pro.

Adrian Beasley is an attorney on the Insurance Team within the Corporate/Commercial Practice Group at Appleby. A copy of Mr. Beasley’s column can be found on the Appleby website at www.applebyglobal.com .

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters described herein, persons are advised to consult with a lawyer.