Top insurers contributed 16% of our economy!

Tuesday, July 22, 2014

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The international re/insurers who make up the membership of the Association of Bermuda Insurers and Reinsurers claim to have contributed nearly $900 million to the Bermuda economy in 2013.

The industry representative body released its annual Bermuda Economic Impact Survey yesterday, which estimated that its members had contributed $886.8 million to the economy — up by $70 million over last year.

That figure represents 16.1 percent of Bermuda’s 2012 gross domestic product — but ABIR believes “the aggregate economic impact of its members in Bermuda is a multiple of that direct contribution and employment to the benefit of Bermuda’s economy”. International business activity as a whole accounts directly for more than a quarter of the Island’s GDP, according to Government figures.

The survey found that the company’s Bermuda-based employees numbered more than 1,500, around two-thirds of whom were Bermudians, spouses of Bermudians, or Permanent Residency Certificate holders.

The organisation’s chairman Mike McGavick, who is also the chief executive officer of XL Group, said business-friendly policies introduced by the One Bermuda Alliance Government made Bermuda a more attractive jurisdiction in which to base staff.

However, he warned that the headwinds facing the insurance industry would impact ABIR’s Bermuda-based employment.

Nineteen of ABIR’s 21 members participated in the survey.

“The Government’s action to ease business travel restrictions, lengthen work permits and foster long term residence opportunities will bear fruit over time in employee location decisions,” Mr McGavick said in ABIR’s statement yesterday. “For every employee we bring to Bermuda, more jobs for Bermudians are created.”

ABIR’s members represent the largest business segment in Bermuda, directly and indirectly driving economic activity, jobs, tourism and Government revenues, he added.

And Mr McGavick warned: “The trend towards consolidation and the soft market conditions, however, will continue to affect our local employment.”

ABIR president Bradley Kading said: “Bermuda is the centre of innovation in property catastrophe underwriting and the location of key talent in this business segment has allowed Bermuda to attract significant amounts of capital from pension funds to further grow Bermuda’s footprint in the alternative capital market.

“The Bermuda Monetary Authority’s accomplishments in meeting international regulatory standards and the leadership of the Minister of Finance in meeting the necessary high levels of transparency, cooperation, and tax law compliance are twin foundations necessary for this business to thrive here. We applaud their actions.”

The survey found that ABIR members employed 1,516 full-time people in Bermuda in 2013, down 73 from 1,589 reported at year-end 2012. Of these employees 992 are Bermudian. This is down 61 from 2012. The percentage of the ABIR Bermuda employees that were Bermudian in 2013 was 65.4 percent.

ABIR explained: “An analysis of the 17 members who reported for both the 2012 and 2013 calendar years shows a decrease of only six Bermuda-based, full-time employees compared to the decrease of 73 noted in the aggregate data. Further, the number of Bermudians employed between the 17 ABIR companies reporting in 2012 and 2013 was a decline of 16, compared to the 86 noted in the aggregate data. Variability of reporting companies and membership can exaggerate some of the reported results and the 2013 data reflects the loss of one large ABIR member which was purchased by another non-member insurer.”

The total economic contribution is a sum of travel and entertainment expenses, payments for business services, charitable contributions, real estate costs including housing reimbursement, plus the payroll, Mr Kading said.

Travel and Entertainment

— $28.8 million in Bermuda on hotels, airfare, restaurants, taxis and catering in 2013, up nearly $1 million over 2012.

Business services

— $66.9 million in Bermuda on legal, accounting, actuarial, temporary services and other consulting services, in 2012 they spent $75.6 million.

Charitable giving

Nearly $13 million in 2013 to Bermuda based charities; up from $10 million in 2012. Further, ABIR members have pledged or contributed a cumulative total of $7.9 million towards the Bermuda Hospital project, during the last three years.

Construction, real estate and housing costs

More than $107 million spent on construction, real estate, and housing costs in Bermuda; roughly $200,000 more than in 2012. Construction spending has had great variability over the years.

Employment

In 2013, 24 employees left Bermuda to work for their companies outside Bermuda, of which 20 were executive/senior/or middle management positions. In 2012, 32 employees left Bermuda to work for their companies outside of the country.

ABIR includes non-Bermudian spouses of Bermudians and Permanent Residency Certificate holders in its description of Bermudians.