Bermuda seeing SPI growth
Bermuda says it is becoming a centre of Special Purpose Insurer and Insurance Linked Security business.
In the first nine months of 2012 the Bermuda Monetary Authority registered SPIs with total premiums of $595m – including four SPIs underwriting over $1.2bn of cat bonds.
The market capitalisation of Bermuda-listed ILS has jumped from $3bn at the end of 2011 to $5bn through the first half of 2012.
Shelby Weldon, director of Licensing and Authorisations at the BMA, said: “We are seeing continued momentum and high levels of market interest in the SPI and ILS spaces.
“The process of convergence between the (re)insurance industry and the capital markets, combined with Bermuda’s quality environment, continues to attract sophisticated clients to the Island.”
And SPIs are starting to complement the traditional insurance models, said Weldon. “As well as the much spoken of cat bond SPI’s, we are seeing a wide range of SPI uses this year.
“From property catastrophe reinsurance like European windstorm and Florida hurricane coverage, to Excess of Loss and Industry Loss Warranty coverage, we are starting to see a lot of innovative uses in the SPI space.”
The world’s largest cat bond deal took place in Bermuda in Q2 2012, when Everglades Re Ltd. Underwrote $750m in cat bonds for Florida Citizens Property Insurance.
A total of 36 ILS deals have been listed on the Bermuda Stock Exchange (BSX), making up approximately one-third of global market issuance.