2004: HELD CAPTIVE – A HISTORY OF INTERNATIONAL INSURANCE IN BERMUDA
Catherine Duffy’s comprehensive review of the island’s insurance growth is now available at island bookstores and online at www.bfis.bm. Based upon in-depth interviews with all the major players, Held Captive reveals how a small, conservative and isolated insurance community transformed itself into a provider of worldwide services and a facility for the development of new responses to the challenges we all face in the 21st century. For more information or to place an online order, visit www.bfis.bm

2003: LOCAL CATASTROPHE
September 5th. The island is battered by Hurricane Fabian resulting in power outages, significant building and road damage. Most notably 4 lives are lost in the tragedy. Local insurers react quickly with property adjusters and fast-tracking of claims. In keeping with their reputation as good corporate citizens, some international businesses supply corporate jets to bring in emergency generators and other needed supplies. Local banks in turn respond by providing emergency repair loans and other forms of relief to those impacted. Bermuda-Inc is back in business immediately with full recovery weeks later upon restoration of the Causeway linking the airport to the rest of the island. On a global pricing level, property rates flatten and begin to decline two years post September 11th.

2001: SEPTEMBER 11TH
Following the World Trade Centre disaster, the capital markets supply billions to provide start up capital for new reinsurance and insurance firms formed in Bermuda. This capital boosts the island’s economy helping to offset the severe decline in tourism due to post September 11th travel jitters. This was one of the two largest catastrophic losses faced in the industry’s history, the other being Hurricane Andrew. Fitch’s Ratings estimates that over 100 reinsurance companies were formed during this period, in a manner similar to Hurricane Andrew’s “Class of 1992”. It further states that the sobriquet “Class of 2001” can be applied to 7 companies with initial capital of $500 million or more serving diversified lines: AWAC (Allied World Assurance Company), Axis Specialty, Da Vinci Reinsurance, Endurance Speciality Insurance, Montpelier Reinsur-ance and Olympus Reinsurance. These companies combined represent $7.3 billion in capital. The sheer size of these capital influxes raises the bar from $100 million of startup capital previously seen as the minimally accepted amount for a serious player to in excess of $500 million. In their first full year of business, 2002, these companies collectively write $5 billion in net premiums.

1996: BERMUDA FOUNDATION FOR INSURANCE STUDIES (BFIS)
BFIS was established in response to the industry’s need to attract Bermudians to its field. Primarily a provider of scholarship funding, BFIS has now grown to include mentoring, intern, and career information programmes. It is funded by pledged donations, primarily from the insurance industry. As of 2002, 37 students have received financial awards and 19 have now completed their 4-year degrees in insurance, risk management, finance or actuarial science and are working in the insurance sector. More information about BFIS can be found on its web site at www.bfis.bm

1994: RISK PREDICTION INITIATIVE
Created after a 1994 seminar that first brought scientists and insurance professionals together, the Risk Prediction Initiative was started as a Bermuda Biological Station for Research programme designed to foster the relationship between science and business. RPI’s purpose is to explore ways in which the reinsurance and insurance industry can use the latest findings and predictions made by climate scientists in a business-appropriate manner. The programme is supported by several locally- and internationally-based reinsurers and insurers. More information can be found at www.bbsr.edu/rpi/

1992: HURRICANE ANDREW
According to Fitch’s Rating Service, 8 major catastrophe reinsurers (cat companies) form in response to Hurricane Andrew (August 24th), the largest disaster – in financial terms – experienced at that time in the industry. Known as the “Class of 1992”, they include Cat Ltd. (now part of Ace Tempest Re), Global Capital Re (now part of XL Re), IPC Re Holdings, La Salle Re Ltd. (now part of Endurance Specialty), Mid Ocean Ltd. (now part of XL Re), Partner Re, Renaissance Re Holdings Ltd., and Tempest Reinsurance Holdings Ltd. (now part of Ace Tempest Re). Together these companies represent an influx of over $4 billion in capital.

1988: FINITE RISK
This year saw the birth of Centre Re (now Centre Solutions) creator of finite reinsurance. The company is formed with $250 million of capital provided by the Zurich Insurance Group and a number of other investors. Founded by Steven Gluckstern and the late Michael Palm, Centre Re offers for the first time to the market multi-year, multi-line coverage with capped liability in exchange for profit sharing. A number of finite risk companies and in-house teams are soon created in response to the mainstreaming of this product.

1985: EXCESS LIABILITY
In the mid 1980’s large U.S. corporations were finding it difficult to buy excess liability insurance. In 1985, ACE Ltd. (ACE) is created to provide this coverage. ACE, the brainchild of Robert Clements of Marsh & McLennan, is formed by 34 U.S. companies contributing initial capital of over $200 million. In 1986, XL Capital Ltd. (XL) (formerly EXEL Limited) is formed, based on the same principles as ACE. Together ACE and XL are known as the Class of 1985 by Fitch Ratings, and start the next stage of Bermuda’s development as an insurance centre.

1978: INSURANCE ACT
The Insurance Act is created to regulate the industry. The Act provides for the establishment of the Insurance Advisory Committee. The IAC is the official advising body to the government of the insurance industry. The IAC comprises representatives of business, professional and Government regulatory agencies. Bermuda’s insurance regulation is designed to facilitate the creation of companies and products while ensuring that companies operate responsibly within specific margins of solvency.

1970: BERMUDA INSURANCE INSTITUTE
The Bermuda Insurance Institute is formed to provide insurance education to the employees of its member companies. It now offers programmes from introductory seminars to examination courses leading to professional qualifications for Bermudians. Details of its courses are available on the web site at www.bii.bm

1960’s: CAPTIVES
Fred Reiss develops the concept of a “captive”, which is an insurance company set up and owned by a non-insurance parent company, in order to finance the parent’s insurable exposures. The former fire protection engineer from Ohio chose Bermuda as the most suitable site for implementation of the captive concept and the island became a pioneering domicile for captives. Today, although some 39 other jurisdictions around the world now seek captive business, Bermuda remains the global leader, with some 1,200 of these special purpose companies located here, which amounts to one third of all the world’s captives and twice as many as the next largest domicile.

1940’s: EMERGENCE
The island’s international insurance market starts in 1947 when C.V. Starr selects Bermuda as the location for his American International Underwriters Company.