AM Best On Canopius Swiss Move
The announcement by Lloyd’s insurer Canopius Group Ltd. that it will establish a reinsurance operation in Zurich is further recognition of Switzerland’s emergence as a reinsurance centre — and another blow to Bermuda’s reputation as the global domicile of choice for reinsurers, analysts at A.M. Best report.
Canopius Europe, as the new operation will be known, will start by seeking European treaty reinsurance business, to be underwritten within Canopius’s Syndicate 4444 at Lloyd’s. The new entity is expected to start operating in the middle of 2011. In addition to London, Canopius also does business in Bermuda.
“Zurich is a major financial centre and has become a well supported and established reinsurance hub, making it an ideal location for our expansion into Europe,” said Michael Watson, chairman of Canopius, in a statement.
In apparent anticipation of the changing regulatory environment in the European Union, such firms as Bermuda-based Catlin and Amlin — which redomicled its headquarters from the island in Switzerland last year — have launched operations in Zurich .
A.M. Best said higher capital requirements that insurers are likely to face under Solvency II may increase the need of insurers for reinsurance.
“Solvency II is having an influence,” said Mike Van Slooten, head of broker Aon Benfield’s international research team, told Best.
The proximity of continental insurance companies to reinsurers in Zurich can make them more willing customers, Mr. Van Slooten said.
Catherine Thomas, director of analytics at the A.M. Best Co., agreed that Switzerland has growing attractions for reinsurers.
“What’s led to the recent wave of companies going there is the expectation that, with Solvency II, there will be increased demand for reinsurance in Europe,” Ms Thomas told A.M. Best.
The accumulation of skills in a jurisdiction can have “kind of a snowball effect,” Mr. Van Slooten said. The more companies that move to a location, the bigger becomes the pool of available talent.
Switzerland is viewed as “a pretty good place to do business” for certain reinsurance operations, he added, noting the reluctance of some European reinsurance buyers to place business in Bermuda.
Despite his confidence that Bermuda will achieve equivalence under Solvency II, Mr. Van Slooten said there is uncertainty within the industry on the issue. If Bermuda does not gain equivalence, he suggested, Bermuda-based reinsurers might worry that they would be trading at a disadvantage to companies operating from territories that have equivalence.
Solvency II, which is due to take effect at the beginning of 2013, was designed to introduce a uniform capital adequacy structure for insurers and reinsurers throughout the 27-member European Union. Along with Bermuda and Japan, Switzerland — not an EU member – is also seeking Solvency II equivalence.
Switzerland’s tax environment can be a lure for reinsurance companies, Mr. Van Slooten said, even though a similar operation in Bermuda would incur no tax. Decisions about whether to operate in Bermuda, he suggested, may be affected by the political debate in the United States about Bermuda’s tax structure.
Recent industry analyses concluded Switzerland is a growing threat to Bermuda’s reinsurance-sector because of the pending Solvency II regulations, lingering uncertainty about Washington’s tax intentions and internal considerations such as work permit limits and a sense the island has reached its full capacity as a business centre.
we’re loosing it. I’m not a salesman but if I was, I’ll do whatever it takes to protect my client list from copy cat preditors
I don’t think we’re doing enough or even worse, do we know what we’re doing???
Maybe we should have hired international business consultants over the last five years instead of tourism & public transport consultants?
Frightening…..Lister needs to change portfolio with Minors NOW