For the past seven years, Global Reinsurance has published a review of the Bermuda market. This year is no exception, and the overview of 2002 on Bermuda proves that it has truly come of age. It is no longer the 'incubator island', the 'insurance laboratory' or the 'convergence island'. Although 21 square miles of rock set in the middle of the Atlantic has successfully - and successively - mastered all these roles, it has now claimed its place as a fully equipped re/insurance marketplace, offering a variety of traditional and innovative products to the global risk community.
Arguments abound as to which wave Bermuda is currently riding. For the purist (one could say pedant), the first wave took place in the 1960s, with the introduction of the captive concept. Almost 40 years on (which could lead onto the argument of whether captives now fall into the category of 'alternative risk transfer' vehicles), Bermuda remains the largest captive domicile, though its lead is beginning to slip as the fall-out from Enron, Tyco and WorldCom, and the aversion to corporate inversions make inroads into new captive formations, which currently appear to be directed towards other domiciles.
It was the mid-1980s which saw the second wave, when the excess liability crisis in North America resulted in ACE and XL starting up. These are now both huge global players, with significant operations in all major markets (not least ACE's China operations set up last May), writing all classes of business around the world.
Ten years ago bore witness to the third wave, when hurricane Andrew blew through several re/insurers, devastating their results and leaving a trail of capacity chaos in its wake. From the wreckage emerged the cat pack, a group of specialist property catastrophe reinsurers set up on Bermuda to write the business nobody else would dare touch. The first decade of the cat pack is noted in this issue with an article looking at what has happened to the players and protagonists, and it is probably worth noting that two of the start-ups of 1993 continue as property catastrophe specialists and are marking their 10th anniversary with some excellent results.
And so to the fourth wave. The reasons behind the formations of late 2001 and early 2002 are well known, though as a quick aside it is worth noting that at least two of the post-9/11 start-ups - d'Artagnan and Special Risk Insurance & Reinsurance Luxembourg SA - have not made it this far, the former because it didn't reach its funding requirements (though the company remains registered in Bermuda and the proposed principal, Jean-Marie Nessi, has now emerged at cat packer PartnerRe) and the latter, a specialty terrorism cover provider for the European market, because of a lack of interest. But AWAC, AXIS, Endurance, Montpelier Re, Platinum, Aspen, Olympus, Queens Island, DaVinci Re, sEnergy, CICL et al have proved that Bermuda is an easy yet credible choice for setting up a new re/insurance operation - almost a 'no brainer' as some might say. Perhaps this most recent wave is Bermuda's brainwave.
By Sarah Goddard
Sarah Goddard is the editor of Global Reinsurance.