Bermuda

Bermuda ‘more stable on tax and regulation than the UK’ says insurance veteran Hiscox


By added on 01/08/2012

Bermuda is more stable than the UK on matters of taxation and regulation, according to veteran Hiscox chairman Robert Hiscox, reports the Royal Gazette.

Mr Hiscox made the remark in an interview with The Royal Gazette yesterday, shortly after the Bermuda-based re/insurer announced that it had selected chief underwriting officer Robert Childs to succeed him as chairman next year.

Earlier this year 69-year-old Mr Hiscox announced he would retire from the firm he has led since his father died in 1970.

The company also announced that Jeremy Pinchin will be the new CEO of the Bermuda-based reinsurance business. Mr Pinchin, Hiscox’s group claims director, will replace Charles Dupplin, who is due to leave the Island in mid-August for personal reasons, as previously reported by this newspaper.

The company continues to be well pleased with Bermuda as a domicile, Mr Hiscox said. Hiscox moved its domicile to Bermuda from the UK in 2005. This year, Lancashire Holdings moved its tax base and head office from Bermuda to the UK after the company negotiated a tax deal with the British Government, which is actively trying to lure insurers to London.

Mr Hiscox said there were no plans on the part of his company, the second-largest insurer in the Lloyd’s of London market, to follow suit.

“We like being in Bermuda,” Mr Hiscox said. “There are other reasons, apart from the tax benefits. The regulation, for example. In the UK, the regulation is very onerous. Thank God they only regulate our UK businesses.

“I think Bermuda has done a marvellous job and doesn’t get the accolades it deserves. I remember in the 1970s that we all knocked it, but now it’s an extremely important reinsurance centre.

“It really is a remarkable story that a rock in the middle of the Atlantic could become the world’s greatest reinsurance centre. In my opinion, Bermuda is more stable on tax and regulation than the UK.”

New Hiscox Bermuda CEO Mr Pinchin was previously a board member and company secretary at the Sedgwick Group, the international broker now part of Marsh. He joined Lloyd’s in 2002 to head up a team coordinating the market’s management of its exposure the losses arising from the September 11 attacks. He became head of claims, reinsurance and open years at Lloyd’s, and was responsible for the market’s first coordinated claims strategy and the development of Claims Management Principles.

He joined Hiscox in 2005 as group claims director, overseeing the development of the claims division at Hiscox.

Mr Hiscox added that he had every confidence in Mr Childs, a former Hiscox Bermuda CEO, succeeding him as chairman.

“I like the fact that he’s an underwriter in the front line and that we’ll have an expert at the head of the table,” Mr Hiscox said.

In the company’s interim statement, Mr Hiscox touched on the fact that CUO Mr Childs would, as chairman, be having group CEO Bronek Moasojada report to him, while the opposite is the case in their operational roles.

“I believe that in underwriting matters he [Mr Childs] has been in effect the ultimate arbiter, and underwriting is our business, and I know and have witnessed that he has the strength to insist if need be,” Mr Hiscox said.

The news of the appointments came as Hiscox declared a pretax profit of £125.8 million ($197.7 million) for the first six months of the year, compared with a loss of £85.6 million a year earlier. Analysts had expected a profit of £109 million, according to a company poll.

The Bermuda reinsurance business grew by 11.4 per cent and recorded healthy profits, helped by what the company described as “the steep rise in rates that followed last year’s series of very large natural disasters”.

“Rates for Japanese earthquake excess have of loss business have doubled since the Tohoku earthquake, and Bermuda has quadrupled its income in this area,” Hiscox reported. “We had followed our usual practice of gently withdrawing as rates drop and others wish to take our place, and then increasing rapidly when the inevitable loss drives prices up and wounded competitors away.”

Hiscox increased its dividend to six cents per share, an increase of nearly 18 per cent.

Its group combined ratio was 81.7 per cent, reflecting strong underwriting profitability, while annualised return on equity for the first half of 2012 was 20.9 per cent. The group wrote more business, with gross premiums rising to £906.4 million, compared to US$847.5 million in the same period of last year.