Best: Equivalency Will Boost Bermuda Firms

If Bermuda and Switzerland are successful in their bids to be considered among the first non-European Union jurisdictions to meet new regulatory requirements under Solvency II, it could have a positive impact on companies domiciled there, Stefan Holzberger, managing director of analytics with A.M. Best Europe, said in this week’s issue of “BestWeek US/Canada”.

“Equivalency will allow insurers domiciled in countries deemed equivalent to continue to operate under the rules imposed by their local regulator,” Mr. Holzberger told the international ratings agency’s publication. “This means that these companies will be able to write business within the EU without additional regulatory hurdles imposed by the EU regulators such as heightened collateral requirements, and additional required capital to back up certain lines of business.

“In addition, these companies will enjoy greater fungibility of capital with the ability to move funds in and out of the EU,” Mr. Holzberger said. “Ultimately, the domiciles that obtain equivalency will likely see greater interest in re/insurers relocating there due to the lower regulatory costs and red tape related to doing business within the EU.”

The European Insurance and Occupational Pensions Authority, the European insurance regulators, are working on rolling out Solvency II for the 27-member EU nations, and recently assessed the first countries –Bermuda, Switzerland and Japan — that are being considered for equivalency.

EIOPA found the jurisdictions could be considered equivalent, with some caveats and suggested improvements.

“We feel quite good about the report as it stands today,” Jeremy Cox [pictured], chief executive officer of the Bermuda Monetary Authority, said. “Effectively, what they said is Bermuda, for its commercial insurance sector, is equivalent, with some caveats.

“We have reviewed those caveats and I don’t think there are many things there that we would feel uncomfortable further evolving our position on,” Mr. Cox added. “We should be in a very good position for a formal decision on equivalency by the end of next year.”

#BermudaBusiness #BermudaInsurance #BermudaMonetaryAuthority #Europe #SolvencyII

Category: All, Business