Bermuda outlook: though a good place to do business, insurers and reinsurers will not hesitate to go elsewhere—Cuba, for example—should the need or the opportunity arise, executives say

Risk & Insurance, Oct 1, 2003 by Jack Roberts, Roger Crombie

In July, Risk & Insurance brought together a group of key players in the Bermuda reinsurance market to assess the state of the industry. They included W. David Brining, executive vice president of Max Re; James P. Bryce, president and CEO of IPC Re; Dwight R. Evans, president of Arch Reinsurance; David M. Furby, president of ACE Global Reinsurance; Kenneth J. LeStrange, CEO of Endurance Specialty Insurance and Michael Morrison, CEO of Allied World Assurance Co. Ltd The discussion, published in two parts, was moderated by Risk & Insurance Editor Jack Roberts and Bermuda correspondent Roger Crombie. The first part appeared in the Sept. 1 issue of the magazine. The last part appears below.

What's your outlook on Bermuda, as heads of reinsurers based there, and what do you see as the risks that you face operating in this market?

Morrison: Whichever government has been in power, none has ever done anything intentionally to harm international business. Nor do they desire to do that. They try to do that delicate balance of trying to manage the politics of Bermuda and the population's desires along with the obviously very real benefits of having international business. 1 guess the biggest issue on everyone's minds is the issue of the work permits and how that's going to be handled, and the issue of the "key executives." How that all comes into play could be, for instance, an issue because there are only about eight or nine Bermudian actuaries in the world.

Bryce: I was five years in Japan, two-and-a-half years in Hong Kong. This is the most business-friendly environment in terns of government of all the jurisdictions, including the United States. Our single largest shareholder, AIG, has been here for more than half a century. Its operations here started in 1947. It was the first exempt company to set up here and it is a testament to how well business and government work here.

LeStrange: We're the newcomer. We've been here for a year-and-a-half and we selected this jurisdiction out of many possibilities. We feel now, with the benefit of hindsight, that we made a great decision to place our headquarters here. I've had some interaction with people in government. What I hear from them is that there are a few issues--and none of them are insolvable-that are governing some of the behavior we have experienced recently. Furby: I'd echo the sentiments that have been expressed. I'm very new to the island having only been here for 10 months.... I think there is a receptive mind-set out there for a true relationship between business and government with the recognition of the need to build the staff and skills required to manage successful businesses.

Morrison: We've got a lot of very bright young people within our company. We've promoted some from underwriting assistant to junior underwriter and right on up. But if we're talking about "the key player," I am not sure there is going to be enough Bermudians ready by 2007 to be ready to take over that senior level among all companies that are here. There may be one or two who are going to be in high positions ... I think 2007 is too short a time frame.

LeStrange: One of the things that is happening that might accelerate the development of people in contrast to previous environments is just the influx of visitors, customers and brokers. ... What we've experienced, and all of us are, is an incredible volume of people coming through. All types of customers at all levels. I think Bermudians who work here now are exposed to that, where perhaps 10 years ago they weren't. That's, I think, a big change.

Furby: There is a tremendous diversity of business activity nowadays, across classes of business, and of the people who come to the island. Bryce: I think what the government really has to look at is to be forward-looking.... I think someone is going to have to give some thought to really coming up with a full-time training and educational facility to bring these people along ... I think the burden can't fall all on the companies for training them. You have to have some formal education and the Bermuda Insurance Institute is a tremendous organization, but going forward something has to be developed to meet the needs. I don't think the B II with its limited resources, can really meet the growing needs of the industry.

Evans: My experience coming onto the island new is that it has been a great regulatory environment. The new companies just as much as the older companies here are very much aware of the needs of a small island and the strain that the companies are putting on the island. I think that certainly we feel it is very important for us to give back to the island in a way that helps from an educational standpoint and a quality-of-life standpoint. Certainly the people we hire, and we're hiring more and more Bermudians every day, are very important to our future.

Brining: Even if you could staff 1,000 or 1,500 jobs, what makes anyone here think that there are 1,000 kids today that want to go into insurance or reinsurance? We just did a sponsorship of the international company education awards and a guy wants to be a biology and environmental major and do things about pollution. That's fantastic and as a Bermudian he should. You can't politically force the students of today and tell them that "you will all be going into insurance and reinsurance." There is no town in the United States that has the leaders of $20 billion of capital of companies all just packed into the same town.... My kids have just finished up some years at the school. They have a business course and they talk about this industry. And they hear about us, and they see us coach their sports. But they are not all sitting there saying, "Gee I want to be an actuary or I really want to be an underwriter." They want to be a fireman or a sports personality.