Bermuda saw an uptick in new companies registered in the first half of the year, the Bermuda Monetary Authority said.
For the first half of 2013, 34 new insurers had registered in Bermuda, up from 24 insurers for the same period last year. It also represents an increase from the first quarter, which saw 13 new companies registered, compared with 21 new companies in the second quarter, the BMA said.
The new registrations spanned the entire breadth of the industry: from captive insurers to commercial carriers to long-term (life) insurers. There were 10 new captive insurers registered and four commercial insurers.
"In addition, 12 of the new registrations for Q2 2013 were Special Purpose Insurers with anticipated premiums of over $700 million," Shelby Weldon, director of licensing and authorizations, said in a statement. Six SPIs are expected to underwrite more than $1 billion of excess of loss property catastrophe reinsurance business over the next five years, he said.
Overall, SPIs registered in Bermuda in 2013 are projected to underwrite more than $5 billion over the next five years across a range of business activities including: property catastrophe; retrocession and industry loss warranties; as well as catastrophe bonds and insurance-linked securities.
The catastrophe bond market is booming as cat bond pricing has fallen by about 35% since last year, putting cat bonds on par with --- or perhaps even cheaper than --- traditional reinsurance for the first time, said Swiss Re (Best's News Service, July 10, 2013).
Cat bonds offer collateralized protection, which eliminates counterparty credit risk. Also, most cat bonds are typically three to five year contracts, which allow sponsors to lock in the coverage and pricing longer than they'd be able to under traditional single year reinsurance contracts.