No fear of new ILS hubs: BSX

The Bermuda Stock Exchange (BSX) continues to develop its core mission, which is to create and maintain a capital markets stock exchange platform for the benefit of Bermuda, according to Greg Wojciechowski, chief executive of the BSX.

“The business model is robust and certainly the insurance-linked securities (ILS) element has continued to be a strong proposition for us,” he told Monte Carlo Today. “We continue to fortify our position into the international capital markets.”

The ILS sector continues to develop and grow, and is now a mainstream product in risk management programmes.

Wojciechowski said there is now a record level of ILS listed on the BSX: 270, with a market cap of about $29.2 billion.

“If you look at that as a component of the overall cat bond market it’s a significant part of it—about 80 percent,” he said.

“We’re delighted about that: we’re seeing the results of the work we’ve done with the market, with Bermuda supporting the ILS space.

“We’re seeing previous issuers who had been in the market refilling, and new structures entering from new issuers. We continue to monitor what’s going on in terms of our competitors and other jurisdictions as well, but it’s been a solid year for us.”

Wojciechowski said that Bermuda will watch with keen interest as more domiciles have started to target the ILS sector—expanding the choice of where sponsors can place their securitisations.

He warned that Bermuda will face stiff competition from the other domiciles active in the space or targeting ILS, but the jurisdiction has had a sustainable and effective head-start with its existing infrastructure, expertise and experience. He added that competition is a good thing and that he welcomed it.

“One thing that very few other jurisdictions have is Bermuda’s longevity in the business and the complete critical mass that exists there. The market is going through some changes, with consolidation and the different pressures that are coming from a tax perspective, but the Bermuda model is resilient, it’s working and providing value.

“What makes Bermuda so important to the global industry is its proximity to two of the deepest capital markets and two of the largest reinsurance markets in the world, and also its specialisation in an area of business that the world needs; it needs that coverage for catastrophic events.

“Above all, the infrastructure that’s in Bermuda has evolved, but there has always been an innovative element to the market.
“Risk transfer is in Bermuda’s DNA and as a result the BSX is very much in tune with the nuances of the market,” Wojciechowski concluded.