business in bermuda 2011

7/29/2019 Business in Bermuda 2011

1/16

Business in

BERMUDA

4 The Bermuda MonetaryAuthority Prepares for an

Important Year

5 Private Banking in Bermuda

10 MarketTalk with KRyS Global

SPECIAL REPORT 2011


2/16

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Bermuda


3/16

It was perhaps American author Mark

Twain who best described the lure and

magic o Bermuda when he rst penned

the phrase, You go to heaven if you want to.

Id rather stay in Bermuda over 100 years ago.

Te tiny island situated in the Atlantic roughly

1,000 kilometres o the East Coast of the US,

has evolved with relative ease during the last

few decades, from being a small tourism des-

tination for the wealthy, to what it is today - a

leading, well respected premier international

nancial centre.

2011 marks a signicant year in Bermuda with

the transition of the new government, inspec-

tions of the jurisdictions readiness for Solvency

II equivalency, and the eects of the nancial

crisis fully exposed. Bermuda has had a chal-lenging and tough 2010, even the Insurance

market has felt the pressure with a softening

market and little or no increase to premiums

eecting companies bottom line. Tis has led

to an increase in M&A in the market. Despite a

prolonged soft market and the global economic

recession, according to the Bermuda Monetary

Authority, Bermuda insurers recorded an in-

crease in aggregate total assets to $496 billion

in 2010 (2009: $472.9 billion). otal gross premi-

ums written remained strong, at $119.7 billion,

compared to a 2009 total of $123.5 billion. TeCaptive sector has done particularly well with

a 66% year on year increase in gross premiums

written. Bermuda has also managed to con-

tinue to attract new entities to their shores in

2010. New company registrations by (re)insur-

ers totalled 35, with market entrants including

captive and commercial insurers covering vari-

ous lines of business, including property and

catastrophe and professional liability.

Historically the insurance industry has been

capable of pulling up the market but with

many companies facing their own problems,the economy has felt the eects. Although the

market is upbeat around the Solvency II in-

spections, there are still questions to be asked

of European legislators, questions that aect

certain segments of the industry signicantly

more than others. Business in Bermuda 2011

will highlight how the jurisdiction has pre-

pared itself for the inspections this summer

and will focus on some interesting new op-

portunities the private sector is working on.

In October 2010 the new elected Premier, Ms.

Paula Cox, took oce as the rst female lead-

er in Bermudas history. Premier Cox was the

former Minister of Finance and has kept that

position as well as becoming Premier. Tis

means the Progressive Labour Party retains

power once again while the United Bermuda

Party is still facing severe leadership prob-

lems to mount any signicant challenge.

Te Ministry of Business Development and

ourism have now combined with new lead-

ership. Minister Patrice Minors has taken upthis role in which she brings a wealth of expe-

rience in international business and nance.

Tere will also be a new strategy adopted for

tourism in Bermuda which has seen a signi-

cant drop since the nancial services indus-

try took over as the islands main income pro-

vider. Te newly appointed ourism Board is

a mix of tourism professionals and executive

level business professionals from across the

private sector who have been bought togeth-

er to address the issues facing the sector and

to help re-launch it. Te idea here is to bringnew energy and ideas into a declining sector

which faces increasing competition from re-

gional counterparts and hasnt expanded into

new markets for years. Historically Bermuda

has enjoyed an extremely good partnership

between the public and private sector, and

this is something Minister Minors plans to re-

introduce to the Bermuda tourism product.

Te Association of Bermuda Insurers and

Reinsurers (ABIR) continues to play a strong

leadership role for the sector in advocating on

new European and US Legislation. Te Asso-ciation and the BMA regularly meet with poli-

cymakers in Brussels and European regulatory

leaders at EIOPA. Of course the US is also try-

ing to pass regulations that could signicantly

aect Bermuda by way of punitive tax penal-

ties on foreign competitors to US insurers;

and socialization of natural disaster risk. ABIR

plays a key role in representing its members in-

terests to policy makers and regulators in ma-

jor markets and documenting the important

economic contributions of Bermudas major

(re)insurers in global markets.

Bermudas new government has already comeout with major budget cuts for this scal year

in a sign that the new leadership is commit-

ted to returning the country to a surplus. Te

government has also broken ground on a new

hospital, Te King Edward Memorial Hospital,

which will give work to a construction sector

that has been slow since several commercial

buildings closed out in 2010. Overall Bermuda

is looking forward to a key year in both their

Solvency II and Basel III equivalency tests. Te

island seems to be in the unusual position of

having complete buy in from the private sector.

Bermuda is achieving all main goals in their -nancial services industry and will continue to

be an o-shore leader for years to come. With

the appointment of the new ourism Board,

Bermuda might nally be able to generate the

fresh ideas and enthusiasm that made it a play-

ground for the elite so many years ago.n

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Te views expressed in Business in Bermuda SpecialReport 2011 are not necessarily those shared with thepublisher, Global Investment I Limited. Wishing to re-ect the true nature o Bermuda, the editor has includedarticles rom a number o sources, and the views expressedare those o the individual contributors.

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4/16

The Bermuda Monetary Authority is the sole independent

regulator o Bermudas fnancial services industry, which in-

cludes Bermudas banks and deposit companies, investment

businesses, trust companies, money service businesses and

insurance companies. As a risk-based regulator, the Authority ap-

plies a regulatory framework that is practical and eective for the lo-

cal market and aligned with prevailing international standards. Te

eectiveness of the Bermuda framework and the Authoritys com-mitment to high-standards in regulation has been recognised over

the years by international assessors of its regime, most recently by

the International Monetary Fund in their latest review of Bermudas

nancial regulatory provisions.

However, despite having received high marks in the past, the Au-

thority has not rested on its laurels. As it continues to develop Ber-

mudas regime the Authority

is now focused on the next

regulatory testachieving

regulatory equivalence of its

framework with other major

international markets. Regu-latory equivalence, the pro-

cess whereby one jurisdiction

reviews another jurisdictions

regime and deems it as equal

to its own, and the harmoni-

sation of international regu-

latory standards, are two

critical elements in global -

nancial regulation today. Te benets of regulatory equivalence are

far-reaching in that it enables companies in equivalent jurisdictions

to conduct business on non-discriminatory terms and avoid possible

duplicative regulation and capital charges. From a regulatory per-

spective, equivalence also supports higher standards in regulationin general.

Bermudas current focus is on achieving regulatory equivalence for

its insurance framework with Europes Solvency II Directive. Tis is

an important goal for Bermuda given the signicant volume of busi-

ness conducted by Bermuda-based insurers with the European mar-

ket. 2011 marks a very important year for the Authority as Bermuda

was chosen by the European Commission as one of three countries

to be in the rst wave of third-country (non-European) assessments

under Solvency II, alongside Switzerland and Japan.

Te Authority has made signicant progress in its work plan to

enhance Bermudas insurance regulation in line with the technical

requirements under Solvency II. o date the Authority has imple-mented the Bermuda Solvency Capital Requirement, a risk-based

solvency standard and capital adequacy model for large commercial

insurers; established the application review process and standards

to permit use of insurers internal capital models to determine regu-

latory capital; developed a framework for group-wide supervision

of Bermudas insurers; hosted and participated in a number of su-

pervisory colleges; introduced the Insurance Code of Conduct that

establishes strong governance and risk management standards pro-

portional to the nature of a rms business; and implemented a new

requirement for the largest Bermuda insurers to le public general

purpose nancial statements.

With much of the policy infrastructure to support its enhanced re-gime in place, the Authority is now focused on implementation of the

various components of the supervisory programme resulting from

such changes. Te Authority also established a strategic resourcing

plan to address the specic needs associated with meeting the re-

quirements of its enhanced regime. Te two-year plan, which is an

integral part of the organisations overall equivalence strategy, calls

for the recruitment of ad-

ditional highly-experienced

sta for senior positions to

support and execute the new

regulatory standards and

processes resulting from theframework changes. Tese

additional sta will also pro-

vide further expertise for

implementing key elements

of the Authoritys enhanced

regime, such as group-wide

supervision.

In addition to building up

its people resources, the Authority is taking measures to use tech-

nology to improve its supervisory eectiveness by introducing en-

hanced reporting and analytic tools. Te objective is to use electron-

ic processes strategically to create greater eciencies, richer data

analysis and improved reporting capability from the Authoritys sys-tems. Te main initiative involves facilitating greater levels of auto-

mated ling by rms, and standardised data reporting. Te standar-

disation of data will enable the Authority to enhance its capabilities

for intra- and cross-sectoral analysis for supervisory purposes. Tese

steps aim to ensure that further collaboration between the Authority

and other regulators will be possible through group-wide analysis

and solvency calculations under the newly implemented group su-

pervision framew ork.

Overall, the Authority is well positioned to meet the regulatory

goals it has set for itself and is looking to maintain momentum as

it continues with its programme of strategic regulatory changes.

Along with achieving regulatory equivalence, the Authority s regula-tory framework changes are designed to maintain a robust, eective

regime for Bermudas nancial services market. In this way, the Au-

thority looks to continue to support Bermudas position as a well-

regulated, rst class jurisdiction for nancial services. n

The Bermuda Monetary Authority

Prepares for an Important YearThe Authority prepares for Solvency II Equivalence Inspections.

4

The progress Bermuda has made to

date in enhancing their programme for

the solvency regime for insurers means

that the jurisdiction is among the top in

preparing for Solvency II equivalence.


5/16

Whilst Bermuda is a fnancial centre or insurance and reinsur-

ance it has not been a centre or banking in the way that other

jurisdictions are. Banking in Bermuda is strictly regulated with a limited

number of licenses available. It is nevertheless an extremely attractive ju-

risdiction for private clients by virtue of its robust regulatory regime, ef-

cient consumption-based tax system, and commonwealth-based legal

system. Te banks in Bermuda have an international outlook and highly

experienced teams that work with clients around the globe.

Bermudas nancial industry has for some years now, had risk-based cap-

ital adequacy requirements and mandatory stress testing of assets. Basel II

was introduced for the banking sector in 2009, and the BMA has laid out aclear roadmap for achieving equivalence with Europes Solvency II regime.

Bermuda Commercial Bank has always been a conservative bank

and maintains a very high capital adequacy ratio. As of our last audited

nancial results for the year ending 2010 our ratio was 26.6%, consider-

ably stronger than international standards. We hold no impaired assets,

nor did we invest in the instruments that have caused problems for banks

around the world. We had already adopted a risk-based approach to our

business in 2007 and converted to the IFRS accounting standards for

2010. For us the introduction of tougher standards was not at all dicult.

Challenging Environment or Bank revenues worldwide

Every bank does business dierently and structures their revenue streamsaccordingly. Other factors generally include how eciently a bank man-

ages their assets and their operations, and the level of quality of their book

of business. We must also consider that the regulatory costs continue to

increase. Banks with big mortgage and lending portfolios are under pres-

sure, and those with high leverage models will be accordingly more at risk.

Around the world weve seen deposit rates drop and loan rates increase as

banks seek stronger margins to oset depressed business and increased

risk. We dont see a great deal of innovation right now with so many banks

coping with other problems.

Clients paying more attention to risk

Weve seen clients become far more sensitive to a few keys issues. Tey

are paying more attention to risk and moving away from banks withlower capital adequacy ratios, excessive leverage and convoluted balance

sheets. Tey are looking at sovereign risk issues and demanding strong

duciaries and trustees.

Interestingly our clients and their intermediaries also welcome in-

creased dialogue with the bank and are pleased at the level of access we

give them. As trusted advisors our clients depend on us, they havent

sought to be more hands-on but this dialogue is very important to them.

Our clients are much like ourselves and are generally fairly conserva-tive and look towards wealth preservation. Some clients have sat out the

market turmoil, but the general tone has been to keep portfolios balanced

and diversied.

Bermuda Commercial Bank Services

BCB oers a range of services to private wealth, corporate and commer-

cial clients around the world. Our rust company provides true duciary

services and handles family business, personal and commercial trusts

and special purpose vehicles for commercial transactions. BCB Fund

Services provides accounting services and global asset custody for invest-

ment funds of all kinds. And of course we provide banking, cash manage-

ment, and asset management services.Recently weve seen business slowly recover from the global nancial

crisis, with our clients becoming more active again in their markets. De-

posit levels are increasing again, and our fund clients are increasing their

AUM. About 40% 45% of our business is international in nature, with the

strongest growth from Europe and Asia.

Expansion Plans

BCB is a bit dierent from many other banks in that we emerged from

the GFC with an intact balance sheet and a conservative business model.

We see considerable opportunity in the markets we serve and are look-

ing to expand our business reach into new jurisdictions. One example is

the strategic investment that we made in 2010 in Westhouse Securities, a

London investment rm.Our model is very client-centric and we will build wealth management

solutions for our clients that t our conservative risk prole. We recently

released new exible-term xed deposit products in multiple currencies

which have proven very successful. We have continued to invest in tech-

nology that supports our approach to exible product creation and deliv-

ery as well as deliver a robust control environment.n

Private Banking in BermudaAn inside look at a quiet industry.

By Horst Finkbeiner

Chie Operating Ofcerand Director

Bermuda CommercialBank Limited


6/16

What kind o work does Trott & Duncan ocus on in Bermuda?

What are your expansion plans?

We are a full service law rm that works with both international and

local clients. Our clients are banks, nancial institutions, multination-

als, small and medium sized enterprises, and high-net-worth individ-

uals. We work with some of the biggest employers in Bermuda includ-

ing banks, government ministries, hotels and light industry. Our core

services are litigation, property, corporate, banking and trusts.All areas of the rm are currently busy although the greatest pressure

is on our litigation team which is acting on some of the largest litigation

matters presently going to the courts. We are also fortunate in that as

we work with both the local and the international markets that the im-

pact of the current recession has been minimal and in fact provided us

with opportunities to grow.

Our future is looking very bright as the rm has continued to rap-

idly expand over the last four years. During that period we have dou-

bled in size and we are continuing to take on new sta. At our monthly

strategy meetings we actively review new opportunities in the marketplace and move quickly to make sure that our clients get the services

they are looking for.

What legislation avours Bermuda in both corporate struc-

tures and private structures? What structures are attractive

or corporations in the UK looking to expand business abroad?

Tere are several main drivers of the Bermuda economy that are of

interest to your readers:

Low tax jurisdiction (no corporate tax, no VA, no inheritance tax,

no capital gains, no personal income tax)

Very good regulator (Bermuda Monetary Authority)

Good infrastructure (lawyers, accountants, and other support pro-viders)

A legal system based on English law.

In other words, your readers will be familiar with the laws as they

are based on English law and it is an easy place to do business. If you

carefully structure your personal wealth or corporate structure then

you can take advantage of paying low tax especially when compared

to current rates in the UK.

For individuals we recommend looking at trusts and estate plan-

ning, and for corporate structures we suggest having a Bermuda com-

pany as a part of the international structure. In particular, we are

nding that companies based in the UK which nd their traditional

markets have declined are now looking to expand internationally tond new areas of growth. Many of them use Bermuda as a location for

their parent company. Tese types of businesses are of a wide range

and size and include family owned businesses. For example, recently

we have been working with a company that wants to expand to Brazil

but also has business in the Philippines and Hong Kong.

In Bermuda there are a wide range of companies operating inter-

nationally that include small and medium sized enterprises, many of

which are privately owned or family run. Tese types of companies

are often trading companies with international operations. Te larger

companies, such as multinationals, use Bermuda as a base for their

partner company and for asset holding ( for example a company hold-

ing a satellite, yacht, or intellectual property rights).One other area of growth is the family oce. A family oce man-

ages investments and trusts for a private family with the capital being

the familys own wealth. We are increasingly seeing interest in and use

of Bermuda as a base for this type of business especially from the USA

and UK.

Bermuda is one of the best jurisdictions in the world to locate a

trust, a company, or a family oce. Individuals should ask about us-

ing Bermuda for personal tax structuring. Companies should consid-

er Bermuda as a jurisdiction to hold assets, or as a base for a parent

company for international trading. Bermuda has the infrastructure

of nancial advisors, accountants, lawyers and other professionals to

fully support the activities of all these types of businesses.

Is there an extreme amount o due diligence on the part o the

service provider in order to set up either a corporate or private

structure? What kind o examination process is there involved

and how long does the process typically take?

Te know-your-client procedures for Bermuda are comparable to

those in the UK. Tey are enough to make sure that money laundering

is prevented but exible enough to make sure that there isnt too much

red tape. It must be remembered that Bermudas reputation as a nan-

cial centre, for example, as the third largest re-insurance centre in the

world after New York and London, is not jeopardized by bad publicity

from money laundering. When we undertake our know-your-client

procedures it may take 2-3 days depending on how quickly the clientcan obtain the relevant information.n

Delroy Duncan ([email protected]) - Litigation

Perry Trott ([email protected]) - Trusts

Nicholas Johnson ([email protected]) Corporate and Banking

A Law Firm Specialising

in the FutureWhy Bermuda is such an attractive jurisdiction for business.

6

Our future is looking very bright as

the rm has continued to rapidly ex-

pand over the last four years. Dur-

ing that period we have doubled in

size and we are continuing to take

on new sta.


7/16

Trott & Duncan LimitedTrott & Duncan Building

17A Brunswick Street, Hamilton HM10

PO Box HM 2094, Hamilton HM HX, Bermuda

TEL: (+1) 441.295.7444 FAX: (+1) 441.295.6600

EMAIL: [email protected] WEB: www.td.bm

Trott & Duncan Limited is a full service law rm and one of the most prominent

providers of legal services in Bermuda to both the local and international markets. Our

lawyers are highly trained professionals with rst class experience in Bermuda and other

major nancial service jurisdictions.

TRUST SERVICE COMMITMENT

We are a progressive and dynamic rm that holds the highest professional values in our

work. We have a reputation for providing creative, practical, and commercially orientated

solutions.

Litigation, Arbitration & Dispute Resolution

International Tax Structures

Insolvency

Matrimonial

Company Incorporations & SPVs

Services:Corporate & Company

Private Client, Trusts & Estates

Banking & Finance

(Re)Insurance

Real Estate


8/16

Can you tell us a little bit more about the culture at Arch Capital

Group and how this ties in with the groups success?

Arch Capital has an underwriting culture that is knowledge and skill

intensive. We provide a range of specialty insurance and reinsurance

coverage where knowledge of the underlying risks allows us to provide a

better t with the clients needs. We also stress underwriting discipline,

which is particularly important during this cycle. An important part of

our success is also our conservative investment approach and capitalmanagement. We also consider our employees to be our most valuable

asset and seek to reward them in a manner consistent with our under-

writing approach.

What kind o year was 2010 or Arch Capital? How has the eco-

nomic downturn and sotening o the reinsurance market im-

pacted the group?

Arch performed well in what was a very dicult year for the insur-

ance industry. Despite economic and political troubles around the

world, the industry also had a number of catastrophic losses in an in-

vestment climate that produced few opportunities. Arch Capital earned

$491M for the year ended December 31, 2010 and produced a 12% re-turn on equity for the year which we feel was an acceptable return given

a dicult operating environment.

What are your plans or 2011? What challenges do you oresee?

Where do you see the highest growth potential in 2011?

Te insurance industry remains a highly competitive market where

underwriting of insurance risk makes the dierence between produc-

ing a prot and reporting losses. We believe these conditions favour

companies like Arch, where underwriting expertise allows better risk

selection. Growth, unfortunately, will be very dicult because many of

the risks we are asked to underwrite today fail to meet our protabil-

ity requirements. So, we have to take a patient approach to growth.

Signicant growth will come to Arch, but only at a point where we canachieve a reasonable return on our shareholders capital.

With increasing pressure on the industry with worldwide regu-

latory reorm, how is Arch Capital managing to stay competitive

and ahead o the market?

Around the world, the insurance industry is one of the most highly

regulated industries and the performance of property casualty insur-

ers during the economic crisis of 2008 and 2009 demonstrated that we

have a strong and eective regulatory environment. European insurers

are beginning to implement a new regulatory framework known as Sol-

vency II, which is expected to improve how European insurers measure

risk and allocate capital to maintain a vibrant industry. Here in Bermuda,we have been working towards equivalency with this framework, and the

good news is that much of what Solvency II seeks to do, we have already

been doing in Bermuda.Our history as an industry in Bermuda is one of

innovation and risk modelling that ts well with the goals of Solvency II.

What keeps Bermuda an attractive base or major (re)insurance

and fnancial companies? Do you expect to see more high level

departures this year?

Te history of innovation, which is the hallmark of Bermuda, has

brought a critical mass of like-minded individuals. Tis concentration of

talent attracts talent and resources from around the world ensuring that

Bermuda will remain a key market for insurance for the foreseeable fu-

ture. As the Bermuda market has matured, it is only natural that success-

ful companies would expand their operations and that is what you seetoday - successful companies expanding their presence around the world.

Can you tell us a little bit more about the Lloyds 2012 syndicate?

How did it perorm in 2010? How are you using the Lloyds ve-

hicle in expansion plans?

Our Syndicate 2012 is a perfect example of global expansion. We cre-

ated Syndicate 2012 just two years ago so that we could reach markets

that do not travel to Bermuda and risks which are unique to the Lloyds

market. So today, in addition to writing through the Lloyds market in

London, we are writing insurance covers in South Africa and Australia,

for instance, that provide a broader mix of business than we could achieve

operating solely in Bermuda or London. Te dicult economic and po-

litical environment means that we are cautious about growing today, butthe worldwide licenses of Lloyds will be an important part of our future.

In 2008, Arch Capital partnered with Gul Investment Corpora-

tion to orm Gul Re. How has this partnership developed and

why has Arch decided to enter the Middle East and Gul region?

How has this relationship progressed?

A few years ago, we had the opportunity to form a joint venture in

Dubai with the Gulf Investment Corporation. Te joint venture focuses

on the six states of the Gulf Corporation Council. Te Middle East has

tremendous growth potential as petro-dollars are invested in local proj-

ects and we wanted to be a part of that future. Te Middle East is not an

easy market, of course, and we wanted a partner with local knowledgethat we could merge with our proven underwriting management skills.

oday, Gulf Re is a small reinsurer on the world stage, but we believe in

the future Gulf Re will be a major reinsurer in the Middle East.n

Dinos Iordanou, Chairman, President and CEO, Arch Capital Group Ltd.

Maintaining the Culture

to SucceedWhy a strong emphasis on underwriting allows Arch Capital to expand in turbulent times.

8

The insurance industry remains a

highly competitive market where un-

derwriting of insurance risk makes

the dierence between producing a

prot and reporting losses.


9/16

The captive industry in Bermuda started in 1962 with the in-

corporation o International Risk Management Solutions the

frst company to provide administration o clients captives.

Tis marked a signicant point in Bermudas history as captive man-

agement to this day is still a very important core activity on the island

and major source of both revenue and Bermudas ability to maintaina source of highly talented and experienced workers. Te bulk of Ber-

mudas captives are US-owned entities, often used to insure and re-

insure retentions on general liability, auto liability, workers compen-

sation, property and marine programs and to access the reinsurance

markets. Many are single-parent captives, insuring only the risks of

their parent and aliates. Because of this, Bermuda is home to major

divisions of Aon and the Marsh McLennan Group of Companies, the

two largest captive managers in the world. Te industry has faced sti

competition over the last few years, mostly from US States like Ver-

mont, Florida, and Arizona not to mention several others. Although

Ireland and Switzerland often get mentioned, the real competition

comes from the US where State governments seem to be keen on at-tracting new sources of revenue, thus new industries. Bermuda still

leads in newly licensed captives with Bermuda edging out Vermont in

2010 by roughly 10%.

Te Bermuda Insurance Management Association (BIMA) was

formed in the late 1970s. Te objectives of BIMA, as set out in its con-

stitution include; i) to protect the interests of members and clients, ii)

to liaise with Government and/or any association or body on matters

aecting the insurance industry, iii) to provide a unied approach to

problems and opportunities that may be of concern to the Associa-

tions Members and iv) to encourage professionalism of the members

in the carrying out of their business. At the moment the membership

comprises of 43 of the Islands licensed insurance managers.

In 2011 the Association expects to see more interest in Bermudafrom the Canadian and Latin American markets. Te US market will

continue to be interested in Bermuda. Bermudas regulatory envi-

ronment has always been and will continue to be an evolving en-

vironment, and always following or even setting international stan-

dards for insurance regulation. Obviously keeping a close eye on

Solvency II and the Islands route for equivalency will be a key issue

for the industry in 2011. BIMA feels that to obtain equivalency, there

should be no major change to the regulatory regime for captives as

the regime is eective and is in accordance with international stan-

dards. Whether EU legislators feel the same will be the major water

cooler conversation in 2011.

2011 marks the 6th year of the Bermuda Captive Conference andthe conference has been growing with the industry. he typical at-

tendee is a Bermuda captive owner, service provider, investment

manager/banker, and risk managers considering establishing a

captive in Bermuda. he opening session of the conference will be

a round table discussion with the Premier of Bermuda, Paula Cox,

Jeremy Cox from the BMA, Grace Shelton who is the US Counsel

on the Island and Rees Fletcher, President and CEO ACE Bermuda,

and om McMahon, President of BIMA. he conference has a large

attendance list with industry representatives from Canada, the US,

and Europe. here are several goals of the conference but ultimate-

ly it is to garnish information from the leaders in the industry and

gain insight from veteran captive owners. BIMA certainly hopes to

have more attendees from Latin America and Asia this year for ex-actly those reasons. Historically these large markets havent shown

interest in the use of captives but with heavy marketing and road

shows in the regions on behalf of associations like BIMA and Busi-

ness Bermuda interest has been peaked. Of course the opportunity

to learn information to make your own entities captive succeed

and the networking opportunities are all good reasons to attend

this conference. n

Bermuda Still Leading the

Captive MarketHighlighting the premier event in the Captive professionals calendar.

www.bermudacaptive.bm

Fairmont Southampton Resort, BermudaJune 5 - June 8, 2011Register

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Bermudas regulatory environment

has always been and will continue

to be an evolving environment, and

always following or even setting in-

ternational standards for insurance

regulation.


10/16

Can you tell us a little bit about the key services KRyS Global

oers?

KRyS Global provides solutions to complex cross-border issues in

the areas of Corporate Recovery, Insolvency, Forensic Accounting and

Business Advisory Services.

KRyS Global has over 40 professionals who work from oces in four

jurisdictions Cayman Islands, British Virgin Islands, Bahamas and

Bermuda. Each oce has a team of independent, dedicated and expe-rienced professionals with practical expertise, global experience and

the ability to provide objective, sound advice.

Why did you choose to open an oce in Bermuda? Who are

your main competitors in the Bermuda market?

We saw the need for an oce in Bermuda to support our opera-

tions in the Cayman Islands, BVI and Bahamas and to provide anoth-

er alternative for clients seeking insolvency and corporate recovery

services in Bermuda. Being an independent rm without audit and

advisory service oerings, KRyS Global is not faced with potential

conicts of interest as many of our competitors are. Some current

engagements have a Bermudian element and having an oce locallyprovides the rm with some economies which will benet our cli-

ents. We saw an opportunity to provide professionals, particularly

attorneys and nancial institutions in Bermuda, with a wider range

of choice for these services.

What are the key advantages or clients when dealing with an

independent and specialised frm like KRyS Global? What key

markets does KRyS Global operate in?

KRyS Global operates from oces in the Cayman Islands, British

Virgin Islands, Bahamas and Bermuda although our work is global in

nature, with engagements more often than not involving asset recov-

eries and litigation across the world. We have a network of similar

independent rms who work with us in other jurisdictions, particu-larly in Asia.

In large cases such as Faireld Sentry, the largest feeder fund into

Bernie Mados Ponzi scheme, the liquidator needs to be free of con-

ict in pursuing third parties for recoveries. As noted, because KRyS

Global does not oer audit and advisory services, we do not have is-

sues of conict arising.

Being a smaller independent rm enables KRyS Global to give cli-

ents a more personal service. KRyS Globals practical hands-on ap-

proach ensures all clients receive remedies and results specically

suited to their needs and demands.

Our sta are qualied and experienced in cross border insolvency,

forensic accounting and restructuring and are leaders in their eld.All engagements are carried out by closely managed teams led by a

dedicated director.

Individuals and corporations all over the world are increasing-

ly looking or more liquidity rom their investments. Have you

seen increased activity in dissolving and liquidations o unds,

captives and other fnancial instruments in the markets KRyS

Global serves? How is KRyS Global involved in this process?

In a recessional environment people have a greater need for liquid-

ity and become more diligent in regards to understanding their invest-

ments. We have seen increased activity since the nancial crisis, which

commenced in the last quarter of 2008, mainly due to the economic

environment ushing out incidents of fraud. Te recession caused anumber of investors to conduct additional due diligence on their invest-

ments and client relationships. Tese increased inquiries found incon-

sistencies and concerns which led to an additional need for our services.

We are often asked by clients to do an orderly wind down of invest-

ment vehicles or other entities undertaking a restructure. Having a

specialist rm undertake that work, who are experienced in identify-

ing and addressing the risks that arise, provides an additional layer of

comfort for the directors of those entities.

What trends do you see in 2011 in terms o insolvency and

corporate restructuring and recovery in the region and the

world? What impact do you see this having on global eco-nomic recovery?

We expect to see a steady ow of work during 2011 as some of the is-

sues brought to the fore during the nancial crisis remain unresolved.

Within the region there was an increase in work during 2010 and we do

MarketTalk with:International responsiveness with a local outlook.

10


11/1611

not expect that to slow within the current year. Te issues still aecting

parts of Europe are still to play out and it remains to be seen whetherthese events will have any major impact on the global economy.

KRyS Global has had some high level raud investigation and

orensic accounting cases. What high profle cases is the frm

dealing with at the moment?

KRyS Global is involved in

some of the larger, more com-

plex and unique international

and cross-border assignments

in the Caribbean. Tis demon-

strates our reputation for clear

decisive action, creative solu-

tions and impartial advice whichhas facilitated the growth of the

rm since the onset of recession.

Our larger engagements in-

clude SPhinX Group, Faireld

Sentry, and Sextant Funds. All of

these engagements involve ele-

ments of fraud, cross-border liti-

gation and highly complex issues requiring highly specialised strategies

to recover assets for the benet of creditors.

What were the reasons behind the frm rebranding to KRyS

Global? Does the frm have plans to diversiy its service oer-ing going orward? What new markets does KRyS Global see

opportunity or growth in?

Te new name signies the rms recent growth and expansion

into additional international markets and reects our work, which is

global in nature. With oces in four leading oshore centres in the Ca-

ribbean, we are in a strong position to oer solutions in the region forglobal clients. Having all oces under one brand signies the unity of

the rm and provides a single identity, so our clients understand that

we are one rm and that we share resources between oces.

Our continually expanding international and cross-border experi-

ence, together with KRyS Globals reputation for providing innovative

and creative solutions to com-

plex issues, conrms our posi-

tion as a leader in insolvency

and restructuring in the Carib-

bean. Coming together as KRyS

Global will emphasise our cul-

ture and strengths; that of an

independent, forward thinkinginternational organisation oer-

ing highly personalised service.

We will continue to iden-

tify markets where our unique

skills and experience can add

value and be of benet to our

existing organisation.

What personal message would KRyS Global like to send to the

London marketplace?

When working oshore you want a rm that has local knowledge,

extensive experience dealing with cross-border matters, and practicalsolutions to what can be extremely complex and potentially costly is-

sues. KRyS Global has that perspective and experience. Assignments

are carried out by closely managed and dedicated teams ensuring that

results and exceptional value are delivered to clients. n

By Kenneth Krys, CEO, KRyS Global andBrian Patterson, President, KRyS Global Bermuda

Our continually expanding interna-

tional and cross-border experience,

together with KRyS Globals reputation

for providing innovative and creativesolutions to complex issues, conrms

our position as a leader in insolvency

and restructuring in the Caribbean.


12/16

New Class A Commercial Space

S.E. Pearman Building

9 Par-la-Ville Road, Hamilton

Prime Ofce Space

Available Now!

Please Contact

Kitty Pearman

or urther inormation.

SAGO Ltd

P: 441 535-0141 (MOBILE)

441 295-5113 (OFFICE)

Email: kitty @onc.bm

Web: www.sagoltd.com


13/16

What is Bermudas cur-

rent tourism product?

What type o tourist do

you typically see?

Bermudas current tour-

ism product is made up of

2780 hotel rooms, com-

prising three large hotels

that are over 200 rooms,

headlined by the two Fairmont Hotels that cater to groups, corporate

and leisure business. Tis is further accentuated by an upscale collec-

tion of predominately small to medium sized hotels under 100 rooms.

Tere are over 45 hotels which are under 100 rooms in capacity. Ber-

mudas product is highlighted by magnicent beaches; championship

golf courses; rich historical sites including the town of St. Georges a

UNESCO World Heritage site; a diverse restaurant product; great

shopping and an excellent infrastructure for transportation with its

bus and high speed catamaran ferry service.Te majority of visitors, over 70%, are from the North East coast of the

USA and Canada and have household income of over $125,000. Te aver-

age age of this tourist is 45 65 and comprises couples taking a quick

vacation getaway 2 hours from the east coast. Visitors coming on hon-

eymoon or destination weddings or playing golf make up a niche section

of the market. Approximately 18% of visitors annually come for business.

The Bermuda tourism product and brand is in need o updat-

ing. What are the Ministrys plans in this area? How are you

looking to improve both the Bermuda product oering and

the Bermuda brand?

Te Ministry of Business Development and ourism is the lead Min-istry tasked with encouraging and stimulating new investment in the

hotel industry product in particular. Te Ministry executive team have

full regular contact with all potential hotel developers and provide the

service of guiding these developers through the process of gaining all

process approvals in expeditiously.

Te Minister of ourism has appointed a new Board of ourism who

have been tasked with developing a National ourism Plan that will

address all aspects of improving the tourism product infrastructure as

well as clearly dening Bermudas brand. Tis paln is expected to be

completed by mid summer.

Te Hotel Concessions Act has been the main mechanism used by

the hotels to redevelop their product. It is envisaged that this Act will

be updated in the future to be more broad reaching to all sectors of the

industry, both large and small.

What are the goals and plans o the ministry or boosting visi-

tor arrivals to Bermuda whilst ensuring the best experience?

How will you achieve this?

Te goal of the Ministry is to continue the very focused approach to

seek out business from the markets and regions of highest potential.

Te goal is also to maximize more eciencies with all money that is

being spent to market the destination. Te plan is also to maximize

the eorts on the new services of Westjet Airlines out of Canada as

well as Airtran Airways which commences service out of Baltimore

and Atlanta this spring.

Te department also plans to solidify its new partnership with theBermuda Hotel Association with the ourism Fund and expect that

this new initiative, with new additional marketing funding, will assist

in boosting air arrivals in the months ahead.

Formulating the National ourism Plan will be the main goal that

charts the strategic direction going forward.

The Ministry is now encompassing both the tourism and Inter-

national Business sectors. What were the reasons or combin-

ing these ministries? How will this help both sectors?

Te Ministry is designed to help strengthen the economy, enhance

our competiveness and look for new sources of business so that our

economy remains healthy and vibrant. Te Ministry has the primaryrole in crafting and facilitating progressive policies and practices for

both of the current pillars of Bermudas economy ourism and Inter-

national Business. Tere is considerable synergy as well as eciencies

to be gained by having these lines of businesses combined. Bermudas

proximity to the North East Coast of the United States not only brings

tourists to the island but also allows the our island because of its so-

phisticated and reputable business environment and infrastructure

leverage to create more economic benet in both sectors.

A Buyers MarketFor the rst time in years Bermudas commercial real estate market has several opportunities.

13

By Patrice Minors

Minister o Business

Development and Tourism

Successul economic growth over the

years, coupled with past exchange con-

trols and limited investment oppor-

tunities, has resulted in Bermudians

building wealth through residential and

commercial real estate holdings. oday's

real estate market continues to oer oppor-

tunities to many, although under supply and

over demand have driven prices up in recent

years. Many factors, including the number of

comparable properties on the market, loca-tion, and the state of the economy aect the

price you can expect to pay for either rental or

sale of a property in Bermuda. Property sales

to international purchasers are regulated by

the Bermuda Government in an eort to pro-

tect the balance of foreign ownership.

Over the last year many commercial build-

ings in Hamilton, the capital city of Bermuda,

have come online enhancing the inventory.

Tese buildings reect the workmanship

of the construction rms in Bermuda with

the nest materials and latest technology

throughout several oors of oce space. One

project in particular, the S.E. Pearman Build-

ing is a prime example of aordable oce

space in a market that is typically hard to ndlong term leases at good value. Floor spaces in

the S.E. Pearman Building are available either

as a single tenant with prices starting from

as low as $45 sq.ft/pa or can be divided into

two or three tenant options. Tis is to accom-

modate any type of business who might want

to relocate to Bermuda but may nd renting

a whole oor too large or too pricey for their

needs. Te building will feature a landscaped

entrance plaza and will be fully accessible at

grade entrance. Te lobby elevator services

all six oors plus the basement.

One thing for sure is that now is the time to

enquire about commercial property in Bermu-

da. Tere are several oce buildings that have

recently come online and the market has a widerange of opportunities for the rst time in sever-

al years. Tis coupled with the fact that you can

ride a water ferry into work every morning and

view out onto to the Atlantic at lunch would

surely be enough to peak interest.n

Redening Bermuda Tourism


14/16


15/16

Less Red Tape More Red Carpet

2 Floor, Government Administration Building, 30 Parliament Street, Hamilton HM 12, Bermuda

1-441-295-5151 www.gov.bm

The Ministry of Business Development and Tourism is designedto help strengthen our economy, enhance our competitivenessand look for new sources of business so that our economy

remains healthy and vibrant.The Ministry looks forward to welcoming your business.


16/16

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