Bermuda Stock Exchange Makes Push for ILS Listings

Chris Westfall
Chris Westfall

Bermuda is publicizing its stock exchange as the ideal environment for creating new insurance-linked securities as it competes with the Cayman Islands for dominance in the catastrophe bond industry.

A statement released by the Bermuda Stock Exchange (BSX) last week said that the recent creation of a new share class targeted at ILS will give the island nation’s $200 billion market “the unique opportunity to play a significant role in the convergence of the insurance and capital markets.”

Last month the Bermuda Monetary Authority approved changes to the Insurance Amendment Act that allows for the creation of special-purpose insurers (SPIs), a streamlined method of issuing ILS.

“[The creation of SPIs] recognizes and facilitates the structure of insurance linked securities, such as catastrophe bonds. A listing on an internationally recognized stock exchange makes these securities significantly more attractive for potential investors,” the statement said.

The BSX statement also pointed out that it has listed a total of seven cat bonds with a combined value of $370 million, most recently being the Montana Re cat bond issued earlier this month.

“Since Hurricane Andrew, Bermuda has emerged as the foremost property catastrophe reinsurance market in the world and this new SPI regulation is a step towards consolidating this lead by making it easier for cat bonds to be done out of Bermuda”, said Andre Perez, CEO of Horseshoe Group.

Ironically, Horsehoe’s Perez announced in a separate statement the same week that that the firm has set up a Cayman Island office that will also focus on the administration of catastrophe bonds.