Omega and Hiscox could have started a trend with their
separate decisions to ditch London in favour of Bermuda.
Rivalry between two of the most established reinsurance markets has been given new zeal with the announcements that Hiscox and Omega are upping sticks and re-domiciling from London to Bermuda. And according to an industry source at least two other Lloyd's syndicates (Amlin and Wellington) could be following suit.
Despite appearances that expensive London (where corporate tax rates are typically 30%) may be losing out to low-tax Bermuda, most industry participants are quick to deny any real rivalry exists. Omega CEO Richard Tolliday cautions against generalising. “What's beyond debate is that Bermuda has established a premier insurance market. But they're both thriving marketplaces,” he added.
At the Rendez-Vous de Septembre in Monte Carlo, Stephen Catlin said it was “not a time for petty rivalries” and that competitive reinsurers would continue to tap into the upsides afforded by all the major markets. This view was endorsed by Standard & Poor's in a recent report “The rise of the global (re)insurance nomad”. “Executives are recognising that their organisations are best served if they can benefit from the advantages common to London and Bermuda combined,” said S&P analyst Marcus Rivaldi.
While Omega subscribes to benefiting from a broader reach in the three markets in which it operates, it also intends to “stick to its knitting”, in other words to continue focusing on its key areas of expertise. Tolliday agrees that different markets offer different opportunities. “If you're putting together a score sheet there are pros and cons all over the place,” he explains. “Each market has different strengths and different areas in which it can improve.”
Despite the obvious tax advantages, Tolliday insisted, “It wouldn't be fair to say the decision was just based on tax. Strategically and commercially it was the right move as the majority of our income comes from the US.”