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HAMILTON, Bermuda-The Bermuda government may make an exception to its strict property and land regulations to allow ACE Ltd. and Exel Ltd. to own their own office buildings.
The plan is one of several recent office developments involving international companies in Bermuda that are outgrowing their buildings and finding it difficult to locate alternatives in the island's limited commercial real estate market.
Centre Reinsurance (Bermuda) Ltd. is involved in a deal with a local company to build new offices in Hamilton, and Renaissance Reinsurance Ltd. recently moved into a new development on the Hamilton waterfront.
The moves reflect the growing international business in Bermuda and the limited office space in Hamilton.
ACE and Exel, the holding company for X.L. Insurance Co. Ltd., plan to build new offices in a joint venture on a prime spot in Hamilton now occupied by the Bermudiana Hotel building.
The Bermudiana closed more than 15 years ago. Since its closure, several plans to redevelop the site have been tried unsuccessfully, and the only occupants of the building have been homeless people.
Most recently, in 1994 the Bermuda Financial Centre Ltd. was formed to build a hotel, office and apartment complex on the site. The project was aborted after the company failed to raise enough money.
ACE and Exel plan to knock down the building and erect separate office buildings on the site in a project estimated to cost about $100 million.
However, international companies are only allowed to have a 40% ownership stake in buildings on Bermuda, so a private act of parliament is needed to allow the companies to go ahead with the project.
The Bermudiana Site Rehabilitation Act 1996 is being considered by the Bermuda House of Assembly and is due to be discussed further when parliament reconvenes.
"We have a drop-dead date of March 31 because we need to know yes or no for our future planning," said Gavin Arton, senior vp, investor relations and corporate planning at Exel.
Exel occupies much of Cumberland House in Hamilton and soon will occupy space in other offices nearby.
ACE has a 40% stake in its building, the ACE Building, which it shares with other companies.
If the two companies are successful, they will join American International Group Inc. as the only international insurers in Bermuda to own their own buildings. AIG owned land in Bermuda prior to the regulations restricting ownership.
In other developments in Bermuda, Centre Re will become 40% owner in a $65 million construction project near the Hamilton Princess Hotel.
The initial phase of the project will see two buildings constructed, but more buildings, including apartments, will be added later.
The partners in the project are Centre Re, Waterloo Properties Ltd. and Princess Hotels.
One of the buildings in the complex will be a 120,000-square-foot building to be called The Zurich Centre, which will house the Bermuda operations of Centre Re and other Zurich affiliates.
Centre Re now occupies offices in five buildings in Bermuda, including Cumberland House, said David Brown, president of Centre Re.
"We've been looking for new space for a number of years, but good quality, contiguous office space is very hard to find in Bermuda," he said.
Renaissance Re recently moved into a new rented office building overlooking the waterfront on the outskirts of Hamilton. The move reflects the rapid growth of the catastrophe reinsurance companies in Bermuda.
When Renaissance Re started in 1993, it occupied 200 square feet of office space, while the new Renaissance House provides the company with up to 18,000 square feet, according to Neill A. Currie, senior vp. "We've been very lucky to get into some A class space," he said.