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Q&A: Bob Richards, Bermuda's deputy prime minister and minister of finance

Q&A: Bob Richards, Bermuda's deputy prime minister and minister of finance

Bermuda, one of the world's largest insurance and reinsurance markets, has seen some significant developments in the past few months — it was granted Solvency II equivalence by the European Union, reducing red tape for Bermuda's insurers, and XL Catlin announced plans to redomicile to the island. But it also has seen its share of the captive market shrink, and the “Panama Papers” leak has tainted offshore domiciles in general. Bob Richards, Bermuda's deputy prime minister and minister of finance, spoke recently with Business Insurance Editor Gavin Souter about the developments. Edited excerpts follow.

Q: Why is Solvency II equivalence important for Bermuda?

A: It shows the quality of Bermuda's regulatory regime, which we have worked hard to upgrade — it's been like an eight-year odyssey to get it to where it is now — but it's not only the regulatory framework but the actual quality of participants in the market.

With those two in tandem, we really think that it puts Bermuda in a position that will stand us in good stead, and we don't think any other offshore jurisdiction is likely to get that status. Companies are looking for that expertise, that convenience, that efficiency. We're very pleased that XL Catlin made a decision to move their charter back to Bermuda — their headquarters was essentially in Bermuda even though the charter wasn't.

Q: Do you expect other companies to make a similar move?

A: I'm hopeful. As companies look around the globe for domiciles of advantage, I think Bermuda is uniquely placed, particularly for companies that do business in a lot of different places in the world. We are hopeful that more companies will take advantage of that.

Q: There's been a lot more competition for captive business in the past few years, with U.S. states offering some tax incentives to lure captives. How do you deal with that as a jurisdiction?

A: Well, captives is where it all started for us in insurance, and so we still value our captive business very highly. There's a lot of competition out there, but I think what it really says is that the whole concept of captive really has spread much more.

I think that we'll continue to hold our own with captives. We have that know-how, that intellectual capital, and we have that kind of synergy between private sector and public sector that will keep us competitive. A lot of states in the United States have captives, but the state infrastructure isn't as focused on making insurance work as we are.

Q: The “Panama Papers” leak has put a negative focus on offshore domiciles. How has that affected Bermuda, and how do you respond to it?

A: For the top tax havens in the world, as it relates to the “Panama Papers,” Bermuda wasn't mentioned at all, but a lot of commentators keep putting Bermuda in the mix anyway.

Our policy is to aggressively point out the facts: First, Bermuda has always been selective with whom we do business. We don't accept just anybody; you have to qualify.

Second, we need to know who we're doing business with, so from the get-go, since 1947, we have required to know who the ultimate beneficial owners of companies are and we have those records.

And third, we understand there's a requirement to share that information with competent authorities, so we share that information with tax authorities. We have a network of 90 countries that we share information with through tax information treaties. And we also share information with international law enforcement.

We don't share information with every Tom, Dick and Harry who's just curious. We still think there's a thing as privacy, but privacy's not secrecy.

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