Mergers “Likely To Give Rise To Redundancies”
The “merger mania” we have witnessed in Bermuda’s re/insurance business in the past year is “likely to give rise to redundancies,” Finance Minister Bob Richards said as he delivered the 2015/16 Budget in the House of Assembly on Friday [Feb 20].
In recent months, XL Group confirmed it will acquire Catlin Group, RenaissanceRe will acquire Platinum in a deal worth approximately $1.9 billion, while AXIS Capital and PartnerRe are also set to merge.
In yesterday’s budget speech Minister Richards said, “New capital from the hedge fund space, in the form of insurance-linked securities and special purpose vehicles, have brought even more capital into insurance markets thus further increasing the overcapacity.
“These conditions have triggered the merger mania we have witnessed in Bermuda’s (re)insurance business in the past year. Such mergers provide the new entities with increased economies of scale to cope with the challenge of low rates and low investment returns. More may be on the way.
“Insofar as the Bermuda economy is concerned, such mergers are likely to give rise to redundancies, thereby negatively affecting local employment.”
Minister Richards also touched on employment in the public sector, saying: “We cannot guarantee that the planned reduction in spending can be achieved without layoffs of workers in the public sector for the coming fiscal year.”
He also revealed some increases in the tax structure, with Payroll tax to increase to 14.5%, Corporate Service Tax Rate to be raised from 6% to 7%, while Payroll concessions for the hospitality, restaurant & retail sectors will be partially rolled back with businesses in these sectors paying a rate of 5.5%.
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Zero comments here. No concern at all that private sector employees might lose some jobs.
But you mention the idea that some public sector employees might face the same thing, and all hell breaks loose.
What is equally disturbing is the fact that if another administration had read the budget yesterday , this thread would’ve been a mile long with the anti government venom !
Nope. They’re trying to reduce spending. They trying not to mortgage away our grandchildren on trinkets. Big difference to what you did.
If professional people had lost their high paying jobs owing to a merger of companies the same day a PLP budget that increased payroll taxes was announced , this comment section would be wild with the usual OBA/UBP rhetoric . But now …. Only silence ….
Yea. It’s far too cold outside to be hearing these tree frogs.. loud aren’t they!
Thousands and thousands of high paying jobs were lost under the PLP.
I love the feeble attempts to rewrite history.
…and many ,many more were created under the PLP , Sooo what’s your point ?
Jobs lost in the past were largely due to expatriation of companies, who realized how much cheaper and easier it is to do business elsewhere. These companies are merging with or acquiring others, having nothing to do with Bermuda.
Mergers likely to give rise to redundancies.
Except when schools merge. We just have two principals, two receptionists, two class teachers … In case of sickness or holidays.
Who do you expect to respond to this? If anyone should respond it should be the private sector..but then again the private sector is so diverse that there is no “union”….stop “looking under the hood” and look over your shoulder. ….lol