Bermuda premier defends life reinsurance sector amid 777 Re troubles

Bermuda premier defends life reinsurance sector amid 777 Re troubles | Insurance Business Canada

Reinsurance

Bermuda premier defends life reinsurance sector amid 777 Re troubles

BMA’s robust oversight and swift response helped stem the issue

Reinsurance

By
Kenneth Araullo

Bermuda’s premier, David Burt, has defended the strength of the island’s life reinsurance sector following the financial difficulties at 777 Re, a Hamilton-based reinsurer linked to private equity firm 777 Partners.

In a report from The Financial Times, Burt acknowledged that while not all problems can be prevented, the focus should be on how issues are addressed.

Bermuda has notably become an important center for life insurers seeking to transfer longevity and investment risks. However, the recent troubles at 777 Re have sparked concerns over private equity involvement in the sector.

The reinsurer reportedly became entangled in investments tied to Josh Wander’s Miami-based firm, which includes assets ranging from football clubs to budget airlines.

Burt, who also serves as Bermuda’s finance minister, highlighted the role of the Bermuda Monetary Authority (BMA) in responding to the crisis at 777 Re. The BMA, which regulates the island’s financial sector, has taken steps to crack down on connected-party investments in response to the issues at the company.

Burt said Bermuda has “a very strong and robust regulatory system” and emphasized that international regulators should be reassured by the steps being taken to address concerns.

“It is accepted that we have a very strong and robust regulatory system, where we have made sure to tighten the rules… to make sure that our international regulators, who may have expressed these particular concerns, know that we are taking these matters seriously,” Burt said.

Bermuda’s financial system holds equivalent status to European and US solvency rules, meaning it is viewed as on par with those regulatory environments.

According to Burt, the BMA has been at the forefront of addressing concerns related to private equity ownership of insurers, engaging with international regulators on the matter. He pointed to a 2023 BMA paper outlining specific risks associated with private equity ownership and detailing the authority’s tightened rules around investments.

Burt also addressed broader concerns about the insurability of natural disasters. He said Bermuda’s insurance market would continue to play a key role in assessing and managing these risks, expressing optimism that market cycles will eventually ease pressure on consumers.

In July, 777 Partner’s continuing troubles reached a new development as its London basketball team reportedly faces potential closure due to a legal action supported by multiple creditors.

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