Good Morning Everyone,
I stand before you today, as Bermudians go about their day-to-day affairs, aware of the re-building efforts of our neighbours to the south in the Caribbean, who, in the past few weeks, have experienced some of the most devastating natural disasters in a number of years.
Yet, in the midst of this - there is still the need to celebrate and recognize the successes of what we are doing here in Bermuda, and I am excited to be here today, for Convergence 2017, especially as I have attended every year since 2013. Even dressed to match the décor.
The importance of the Insurance Linked Securities business in Bermuda, and, our catastrophe reinsurance platform, has truly been affirmed by these devastating events, and I am pleased that the growth in this annual ILS meeting, mirrors the growth in Bermuda’s ILS industry.
And, the significance of industries like yours, at the cutting edge of risk financing for some of the most destructive events, cannot be understated.
If we look at the United States, and examine what is happening in Northern California, insurers and reinsurers could pay out several billion dollars to cover claims from those most unfortunate fires. Already, several thousand residential and commercial properties have been destroyed as fires spread across some 9 million acres.
That ongoing tragedy, together with the catastrophic earthquake activity in Mexico and three destructive Atlantic storms making landfall, all within a period of weeks, has meant a trying time for many.
As we have seen in recent years, storms in Bermuda, and around the globe are becoming stronger and more powerful. Hurricanes Harvey, Irma and Maria grew to alarming category 4 and 5 storms causing $100s of Billions in estimated economic losses, and $100 Billion in estimated insured losses. The Bermuda market is expected to pay about 25% of the losses from those catastrophes.
These events can accelerate a capital market’s incursion into insurance market share held by
traditional insurers and reinsurers, especially with regard to the catastrophe business, as ILS
increasingly appears to provide capital efficiencies.
With these changes, the role of the capital markets in the future of insurance and reinsurance will grow in significance. Reinsurers may improve their own capital structures, by embracing alternative capital models and making them part of their own business plans.
But, no matter which way the wind blows, the Bermuda market has demonstrated that it will be able to provide the necessary platform for the future.
With local companies at the front of the pack, there is an ushering in of new and innovative structures. There has been dramatic global growth in ILS and a promise of further progress in these products for insurance and reinsurance lines, well beyond catastrophe reinsurance.
In 2016, the Bermuda Stock Exchange had a record sixty-one (61) new ILS listings. And, by
June of this year, there were 218 listings, taking the overall value of securities to $24.5 billion half way through 2017.
As the island remains the leading jurisdiction for the issuance of catastrophe bonds, the Bermuda Monetary Authority reports that ILS issued from Bermuda represents nearly 74 per cent of total outstanding capacity at the end of Q1-2017.
With the backing of industry and Government, the Bermuda Monetary Authority, has always sought effective supervision, combined with coordination among their global regulatory peers, with strong and useful regulation being critical to today’s financial markets.
This new Government believes the Bermuda market can go even further to serve the needs of the corporate world. However, it will take the continued efforts of working together with industry stakeholders, for all of us to reap the rewards and find mutual benefit.
Over the past 92 days I have spoken to many visitors to our shores who are here to find out more about Bermuda and the opportunities that exist. My message today is the same as it has been over the last few months, Bermuda is an excellent place to do business, and provides an excellent and well regarded platform to – putting it simply – make money.
For those visiting Bermuda, I welcome you to Bermuda. For those who are resident here, thank you for your continued work in leading the world in the ILS space.
And to all attendees, I look forward to supporting the growth of this segment and rest assured that my government will do all it can to ensure that Bermuda is not only a great place to live and work, but an even better place to make money.
Thank you and enjoy the Convergence 2017