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Charman calls for bolder policy reforms

A veteran leader of Bermuda's international re/insurance industry has called on Government to enact bolder reforms to prevent further loss of job creators.

John Charman, chairman and chief executive officer of Endurance Specialty Holdings Ltd, said if executives continued to be treated like “second-class citizens”, then they would “vote with their feet”.

While Mr Charman felt the One Bermuda Alliance (OBA) Government had made some good moves since being elected last December, he said the Island's leaders needed to make more substantive changes to improve the business environment in the economic interests of all residents.

“The time for trimming around the edge has long gone,” Mr Charman told The Royal Gazette. “Business expects.”

While he did not specifically outline the policy changes that he would like to see, he did refer to a 2012 study by the Association of Bermuda Insurers and Reinsurers (ABIR), which showed that the five ABIR members who had traditionally had the largest Bermuda-based workforces had cut staff numbers by almost a quarter in the space of four years, as dozens of executives had left or been relocated.

“We simply cannot afford to lose those people who create both jobs and prosperity,” Mr Charman said. “As I have said many times before, I do not want to be treated like a second-class citizen — if executives continue to be treated like second-class citizens, then they will vote with their feet.”

When a C-suite executive relocates, other jobs are often lost to Bermuda, as entire teams relocate with them, and the support staff who worked with them are no longer needed on the Island.

Many executives have privately stated that Immigration rules that create doubt over their length of stay on the Island and restrictions on property ownership do not give them a sense of belonging in the community — even when they are the co-builders of a companies that employ significant numbers and contribute strongly to the economy.

Mr Charman founded Axis Capital Holdings Ltd in 2001 and led the company for more than a decade before he was ousted by the company's board last year in a disagreement over his responsibilities as chairman.

He was unveiled as the new man at the helm of Endurance in late May, having invested some $30 million of his family's money in the company.

Mr Charman is a strong supporter of Bermuda and has a home on the Island. He urged Government to act now to reinvigorate the international business sector.

“For a number of reasons, I think the Bermuda market has been on the back foot for about three years,” he said. “Among those reasons are the global financial crisis, regulatory pressures and domestic political pressure. At the end of the day, Bermuda, its Government and its people either want to resolve or ameliorate these issues or they won't. International business will react accordingly.

“It's not for us to dictate what government policy is or does. But if there's one thing that is as sure as night follows day, it's that international business will continue to react to the business environment here.

“My personal view is that the Government is trying its best, having been dealt a very bad hand by the previous administration. My advice to them would be that you can't be all things to all people.

“They were elected to lead. They should absolutely show their leadership qualities and they will be judged accordingly. They have significantly changed the direction and emphasis of government, but they still have so much more to do. There has to be fundamental and substantive change.”

Mr Charman hopes to see a more proactive approach to enable Bermuda to compete more strongly against rival jurisdictions.

“I think Bermuda is as well placed for growth today as it ever has been,” he said. “But it takes Government and business to work together to recognise opportunity and to seize it. Instead of sitting back, we have to understand that life is not about waiting for business to come to us. We have to go out there and show that we deserve to be a very important factor in the global economy. Otherwise, we'll wither on the vine. And that is not what I, or my business, are going to do.”

As a Briton who started out in the Lloyd's market, where he built his reputation in the industry, Mr Charman watched with interest June's events when Premier Craig Cannonier, along with other British Overseas Territories leaders, met UK Prime Minister David Cameron in London. Mr Cameron apparently stressed the need for more transparency, in no uncertain terms.

Mr Charman accused the British Government of hypocrisy.

“It looks from afar as if there is a substantial amount of hypocrisy being demonstrated by the UK Government in their relationships with Overseas Territories, as they have had for some time an aggressive marketing campaign for high net-worth individuals from all sorts of rather dubious jurisdictions who are now located — and to all intents and purposes tax-sheltered — in London,” he said.

“All these individuals appear to have had to do was pay a rather paltry sum and be free of most oversight. This holier-than-thou attitude of the UK Government rings a bit hollow to me. So I commend the Premier of Bermuda in standing up and demanding transparency and fairness.

“In Bermuda we should be very proud of the fact that we have high standards of transparency and I see no reason to apologise for that.

“The standards of disclosure in Bermuda are very strong. My long-standing personal and corporate experience of Bermuda has been that it is among the highest standards practised internationally in this regard.”

Another major international challenge for Bermuda is the threat of legislation in the US that could damage the prospects for the Island's insurance industry, such as the Neal bill, which would impose greater US tax obligations on some Bermuda-based re/insurance groups with US subsidiaries, for example. Mr Charman encouraged Government to tackle the issue head on.

“I think the Bermuda Government needs to upgrade and modernise its trading relationship with the United States,” he said. “Bermuda needs to have some kind of all-embracing agreement on goods and services with the US, because it needs to be open, transparent and we need to move on. Otherwise we're going to end up with an outdated and confused situation, which could become highly sensitive for the future.

“Government has a responsibility to deal with this. The best way to deal with an issue is to go headlong at it and get it dealt with.

He used Switzerland as an example of the potential benefits of such an approach.

“Switzerland have had problems with the high net-worth individuals who have failed to declare their assets to the US Government and have apparently been shielded by Swiss banks,” he said.

“The Swiss are now in the thick of renegotiating their trading relationships and tax treaties with the US. And once it's done, then they'll be able to continue their business activity while the US will go and focus on somebody else — probably Bermuda.”

Read more from the remainder of this interview in the next edition of the Bermuda Insurance Journal, free with Hamilton-area newspapers on August 26. Mr Charman speaks at length about the deal that led him to take over at Endurance, how he plans to lead the company, how long he intends to stay there and his views on the global re/insurance market.

Endurance CEO John Charman

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Published August 07, 2013 at 9:49 am (Updated August 07, 2013 at 9:50 am)

Charman calls for bolder policy reforms

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