The One Bermuda Alliance Member of Parliament said Progressive Labour Party efforts to trumpet 53 new insurance registrations in 2011 ignore the fact most of these firms have no actual presence on the island.
“Of the 53 ‘new companies’, a significant number, 23, are ‘paper companies’ or ‘special purpose insurers’, that were formed to perform specific insurance transactions,” he said. ”They don’t actually have a physical presence with staffing jobs, though they do generate business for accounting and law firms and management companies. 2011 saw only two significant companies formed — Third Point and PaC.”
The Progressive Labour Party has dismissed recent criticisms by the Opposition, saying “while Doomsday Bob Richards and his United Bermuda Party [UBP] turned OBA friends are out there telling us the sky is falling and that international business is on the way out, the facts tell another story.
“While the global economic crisis continues to rage and the impact on Bermuda is undeniable, it’s clear that there are positive signs on the international business front under this PLP Government.”
Another recent post on the Bermuda economy at the PLP blog said, “We’ve heard Doomsday Bob [Richards], Lights Out Grant [Gibbons] and the rest of the UBP turned OBA Team say for years that the sky is falling. Like clockwork for the last 15 years, they’ve been saying that a PLP Government will bring about the end of international business.
“But, it hasn’t happened. In fact, the opposite has happened. Bermuda’s international business sector has grown by leaps and bounds since the UBP left office in 1998,” said the PLP.
“The PLP have been having a wonderful childish time attacking me,” said Mr Richards. “It’s part of their shtick to tear down people who have different points of view.
“My approach to public policy has always been to tell the truth as I see it. People need the best information to make the best decisions. This is especially important when times are tough.
“In the past few years, we have seen this Government try to tear down what I have said on the economy, from warnings about the coming recession and the need to plan accordingly, to fiscal caution in the face of declining revenues.
Mr Richards continued: “The Government ignored my advice and Bermudians have paid the price for it in the form of continuing bad policies that have cost jobs and income and cutbacks in services and employment.
“This week, the Government is trumpeting 53 new companies coming to Bermuda. This is a classic example of PLP Government spin misleading Bermuda once again to think that the economy is better than it is. Spin serves no purpose but that of the spinner.
“Here are the facts of this particular bit of information: Of the 53 ‘new companies’, a significant number, 23, are ‘paper companies’ or ‘special purpose insurers’, that were formed to perform specific insurance transactions.
“They don’t actually have a physical presence with staffing jobs, though they do generate business for accounting and law firms and management companies. 2011 saw only two significant companies formed – Third Point and PaC.
“Government touting 53 insurance company incorporations as a 50 percent increase over 2010 creates another false impression, given that 2010 was one of the worst years on record for company incorporations. [Please see accompanying graph]. It’s like a Tourism Minister crowing over a 100 percent increase in winter cruise ship business, when two ships visit the Island compared to the year before,” said Mr Richards.
Mr Richards continued on to say that, “53 insurance company incorporations is an improvement over the record low numbers recorded in 2008, 2009 and 2010, but it is well below the annual average for Bermuda, which ranges between 70 and 80 and higher. Let’s keep things in proper perspective.
“New incorporations are good for Bermuda because they generate business for local service companies, and there is no doubt that that has occurred among the 53 ‘new companies’ in 2011. But the Island remains in a deep hole that has been driven largely by the loss of international businesses.
“Our unprecedented levels of unemployment, empty rental units, declining local sales are all a reflection of the outflow of business people and their families to other jurisdictions.
“How we manage our way out of these hard times will depend on all of us conducting our daily affairs with the best understanding of our economic situation. Government information that misleads does nothing to help the situation.
“The bottom line here is that the Government, through its policies and statements, has been unwelcoming to international business and until that changes we are unlikely to see an improvement,” concluded Mr Richards.
Updated: The PLP issued another response to Mr Richards comments, saying “We understand that the Shadow Minister of Finance doesn’t believe that there is a global economic crisis raging and that it is severely impacting Bermuda. But, it’s reality. And, the fact that we saw big gains in new registrations in spite of this global economic crisis is welcome news.
“But, don’t take our word for it. Peter Willitts of the Bermuda Captive Conference called the registration number “nothing short of fantastic.” Tom McMahon of the Bermuda Insurance Management Association, said that “these are indeed great numbers for Bermuda” and that it was “a great vote of confidence by the international market” in our island. And, Tim Faries of Appleby said that our 2011 performance “bodes well for the future.”
“Bob Richards may attempt to feebly spin his way out of this good news by comparing numbers we produced in the midst of a global financial crisis to the numbers produced during global financial boom times. But, that’s disingenuous and the non-political IB executives know it.
“That’s why they are lauding the numbers and Bob Richards isn’t. Bob Richards has a political stake in talking down Bermuda. But, the non-political IB executives don’t. They are telling it like it is, and, the truth of the matter is that in the middle of a global financial crisis, the registration news is indeed encouraging.”