Next-generation finite risk took a step forward with the formation of Barbados-based Imagine Insurance Co two years ago.
Imagine Insurance Co Ltd (IILC) is the primary operating unit for a next-generation finite risk enterprise that was incorporated in Barbados in September 2000. The Imagine Group represents the new, innovative financial companies that consider Barbados an ideal location from which to conduct business with an international clientele.
The Imagine Group has seven employees based in Wildey. Its Barbados chairman, George Gleadall, chairs the company's board and its underwriting and investment committees. The group's finance and accounting operations are also managed in Barbados, along with a significant component of its reinsurance activities.
The total assets of the Barbados-based finite risk reinsurance entity, IILC, have increased more than three-and-a-half times in less than two years since inception and now exceed $700m.
The company's initial capital was set at $200m. GAAP earnings at 31 December 2001, the end of the company's first year of operations, stood at $14.6m. The capital and surplus of IILC has now grown to over $250m and fiscal 2002 is expected to demonstrate a significant growth in profitability.
This ranks IILC as a significant player in the island's steadily growing international financial services industry. Indeed, since the Imagine Group is internationally perceived as an emerging participant in the global convergence of the insurance and capital markets, Barbados can lay claim to being the incubator for some of the most cutting-edge products being made available to firms around the globe seeking to manage their financial risks more effectively.
Early on in the developmental phase, the Imagine Group's primary investors, alongside its founders and Canada-based Brascan Financial Corp, identified Barbados as an ideal international jurisdiction for IICL. Brascan has enjoyed a long and rewarding operating presence on the island, and it was logical to further capitalise on the pool of talent and regulatory environment that Barbados offers.
Barbados has developed a wide treaty network with major jurisdictions, including the US, Canada and the UK, to offer businesses the ability to structure their activities in the most efficient manner. The financial services industry has been active in Barbados for the past 25 years and has developed an infrastructure that includes technical expertise, a literate population and a range of skill sets necessary for modern business. The University of the West Indies has a campus in Barbados and turns out a wide variety of well-educated, qualified individuals ideally suited to the financial services sector in particular.
Additionally, the legislation in Barbados is broader than in many jurisdictions and thus grants companies the flexibility to create the type of corporate structures specifically suited for their needs. This element is highlighted by the strong regulatory environment for the insurance industry and the capably governed Central Bank of Barbados, which holds responsibility for the oversight of international banks and trust companies on the island.
The country has initiated strict anti-money laundering legislation and was removed from the Organisation for Economic Co-operation and Development (OECD) blacklist, without any demand being made for the Government of Barbados to effect any changes to its legislation or governance. Barbados has also developed a strong information technology sector over the years to support the needs of business. The abundant availability of intellectual and service resources has allowed Barbados to maintain its low cost business-operating environment.
Over the past two years, since its start in Barbados, Imagine Group has achieved significant profitability by completing several major finite risk reinsurance transactions. Its operational focus is on specialised low-volatility, finite risk reinsurance products, combined with an investment strategy that seeks to closely match investment cash in-flows to expected insurance cash out-flows.
Imagine Group's underwriting emphasis is on property/casualty (p/c) reinsurance products, but the company's platform also offers life and health products. The group has bound more than 35 reinsurance transactions to date, with corporate, insurance and reinsurance clients across the globe, in a portfolio which includes 19 p/c transactions and four life transactions. The group intends to solidify its capacity to write profitable business, invest prudently and to that end has recently added additional resources in Wildey.
In addition to increasing its financial assets, the Imagine Group has demonstrated significant growth in all areas of its business. Following the establishment of offices in Bermuda and Barbados, the group has opened offices in Dublin, Copenhagen, St Louis and New York.
On 2 July 2001, the group acquired the Enterprise Reinsurance group, expanding its global reach of clients and offices in what has also proved to be a profitable economic transaction. As a result, the staff complement of the group has multiplied - the current global employee count is 29 - resulting in the broadening of its range of expertise. These added capabilities have helped it to build its client base, increase deal flow and develop rewarding business partnerships.
To date, Imagine Group has exceeded its plan, and this has been reflected in solid financial strength ratings: A (`Strong') by Fitch Ratings and A- (Excellent) by AM Best. While continuing to develop in the reinsurance industry, the Imagine Group is also expanding into broad-based financial services offerings.
Due to the group's momentum, its board of directors elected this summer to specifically re-brand its finite risk reinsurance activities. In June 2002, the Imagine Group formally announced that it is moving forward with finite risk operations under the new name of Vision Re in order to further distinguish and consolidate the group's reinsurance capabilities. Specialising in finite risk reinsurance, Vision Re offers innovative solutions for its clients and will conduct business operations from Imagine Group's principal offices in Barbados and Dublin.
The Imagine Group has evolved from its Barbadian origins into a boutique financial services enterprise, focussed on transforming the financial challenges of its clients into profitable opportunities. The group's newly branded reinsurance division, Vision Re, offers customised finite risk reinsurance structuring to corporations, insurers and reinsurers around the world. Additionally, the asset management skills that naturally arise from that expertise are specifically offered through Perspective, the group's new asset management arm. The group is also forming ViewPoint, a financial markets and securitisation group, which will enable Imagine Group to further provide capabilities to clients.
Asked to comment on Barbados as a jurisdiction, the founder and co-CEO of Imagine Group, Brad Huntington, noted: "I had always been aware of the strong regulatory framework in Barbados, given my background as a practising attorney. When we sought to capitalise on the operating experience of Brascan and best develop our platform of financial service companies, Barbados was an obvious choice for us. We are particularly happy with the active relationship we enjoy with the insurance regulatory officers on the island and the strong legal practices here that aid in legitimising our identity as a solid international competitor."
Mr Huntington's partner in the venture, Thomas Gleeson, added: "Barbados is unique in many respects beyond its undeniable beauty and friendly people. For Imagine, the extraordinarily high level of literacy, work ethic and modern services available on the island all serve to make our efforts as entrepreneurs that much more successful. It is significantly by virtue of the support that our organisation has received from our hosts, the Barbados Government, that we have staked our claim as an emerging presence in the boutique financial services arena. We fully expect Barbados to continue to play an important role in that regard."
The Imagine Group generated $470m of written and earned premium volume during its first year of operations. Total assets and consolidated shareholders' equity stood at $692m and $230m, respectively, at 30 June 2002.
Brascan Corp, a Canadian company with assets of over C$23bn and 50,000 employees worldwide, owns the Imagine Group. Current Brascan operations are largely in the real estate, financial and power generation sectors and over 60% of its assets are located outside of Canada, primarily in the US and South America.