Bermuda is becoming a centre of the global insurance-linked securities (ILS) and special purpose insurer (SPI) business, according to the local regulator.

In the first nine months of this year the Bermuda Monetary Authority registered SPIs with total premiums of $US595 million ($583 million). This includes four SPIs underwriting more than $US1.2 billion ($1.18 billion) of cat bonds, the authority says.

Director Licensing and Authorisations Shelby Weldon says the authority sees “continued momentum and high levels of market interest in the SPI and ILS spaces”.

“This supports reports from industry that Bermuda is emerging as an innovative centre for this type of business due to the wide variety of SPI uses we are starting to see develop,” he said.

Thirty-six ILS deals have been listed on the Bermuda Stock Exchange – one third of global market issuance, the regulator says. Market capitalisation of Bermuda-listed ILS jumped from $US3 billion ($2.9 billion) at the end of last year to $5 billion ($4.9 billion) in the first half of this year.

The world’s largest cat bond deal took place in Bermuda in the second quarter this year when Everglades Re underwrote $US750 million ($735 million) in cat bonds for Florida’s Citizens Property Insurance.

Fifteen SPIs had registered in Bermuda by the end of last month and 33 new insurers registered during the first three quarters of the year, the authority says.

“The process of convergence between the (re)insurance industry and the capital markets, combined with Bermuda’s quality environment, continues to attract sophisticated clients to the island,” Mr Weldon said.

He says as well as cat bonds the authority is “starting to see a lot of innovative uses in the SPI space”, including excess of loss and industry loss warranty coverage.