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BSX Sponsors Leading London Event And Pushes Bermuda As The Place To List Insurance Linked Securities
Hamilton, Bermuda – 29 April, 2010 – The Bermuda Stock Exchange (BSX) is positioning itself as the platform of choice for the listing of insurance linked securities (ILS) such as catastrophe bonds.
Following the BSX’s sponsorship of the IQPC’s 2nd Insurance Linked Securities Summit Europe in London this week, Greg Wojciechowski, President and Chief Executive Officer of the BSX, met with international journalists to promote the exchange.
The BSX currently has nine ILS listed, two of which have been listed this year. Another is expected to be approved in May. The exchange hopes to attract more ILS to form in Bermuda and list on the exchange, in a move that could make the ILS market more liquid and could also attract other institutional investors such as pensions.
“Bermuda has critical mass with sponsors, has the right regulation in place, a well-established stock exchange and so the jurisdiction is seen as the natural place for the convergence of the capital markets and reinsurance,” said Mr Wojciechowski.
Bermuda is the world’s third largest reinsurance market and is already home to 1400 insurance companies with total assets of $442 billion, and many of its reinsurance companies have issued cat bonds or set up special purpose vehicles such as side cars.
The international upsurge in interest in ILS, which includes catastrophe bonds and side cars, comes as institutional investors emerge from the market turmoil looking for non-correlated investments. The collapse of Lehman Brothers had an impact on the collateral structures of four catastrophe bonds. Collateral structures provide additional security for bonds.
Investors are now looking for open and transparent structures and Wojciechowski says that listing on an exchange can provide this security in this asset class. It could also lead to new institutional investors, such as pensions, investing in cat bonds.
Bermuda is well placed to take advantage of this upsurge in interest. Not only is it the third largest reinsurance market in the work, but in addition the Bermuda Monetary Authority approved the changes that resulted in the Insurance Amendment Act 2008, which came into effect in October 2009. This provides specific risk-based regulations for the establishment of special-purpose insurers (SPIs) as a new class of insurer in Bermuda’s insurance class system. It also recognizes and facilitates the structure of ILS, such as cat bonds, and a listing of these securities on an internationally recognized stock exchange makes these securities significantly more attractive for potential investors.
“The process of listing is not at all onerous, and the cost is minimal,” said Wojciechowski. “Listing on a platform like the BSX could increase investor demand as it not only increases transparency, but also makes the product a bit more mainstream from a capital markets standpoint.”
As of the end of April, 2010, the BSX has listed insurance companies and ILS worth $39 billion.
For more information on this release, contact Mairi Mallon at +44 1698 813 103 or mairi@rein4ce.co.uk.