Generally speaking, there was concern as to how the anticipated slowdown in the US would affect the Bermuda market. There has been a marginal slowdown, but if you ask any professional on the island, they will reply that they are still busy – just not as busy as they have been.
Bermuda has enjoyed a solid reputation for providing sophisticated insurance products and has long been seen as a place where innovative solutions could be crafted. This environment has fostered creativity and growth. Indeed, Bermuda is the third-largest reinsurance market outside London and New York, and is now seeing a concentration of securitisation transactions connected to the sector. It is a market that has taken steps to see how creative it can be and to provide its firms' clients with a variety of products.
Before the slowdown, Bermuda was gaining success in the cultivation of a reasonably strong e-commerce market, but that has stagnated somewhat in the present market. The island's strong links with Hong Kong, where many of the listed companies are Bermudian, also means it is affected by the Asian slowdown.
However, it is still experiencing growth. The telecoms industry, for example, is a new niche for Bermuda and one that has proved very successful with both public vehicles and private companies setting up there. Some of the large names in the industry such as Tyco International, Global Crossing and Flag have arrived, either setting up headquarters or doing joint ventures.
A definite coup for Bermuda is the imminent arrival of Willis Holding Company Group, which is moving both the holding company and its operations there – yet another example of how Bermuda is the jurisdiction of choice for many international major exchange listings. Accenture, formerly Andersen Consulting, is also launching its public offering using a Bermuda company. My firm is acting for both companies on these deals.
So why have they chosen Bermuda? It is often considered, particularly on this side of the world, and increasingly so in Europe, as the number one offshore jurisdiction. While regulations might have traditionally been stricter than those for other offshore locations, that historical stance has served it well, as it has had no problems in complying with recent Organisation for Economic Cooperation and Development moves to tighten up offshore markets.
Quite simply, Bermuda has always fostered a culture of “know your customer”, and it is for other jurisdictions now to come up to international standards. While the jurisdiction may have been regarded as over-regulated, this meant that firms there always knew who was arriving to do business. That knowledge provides a high level of comfort about the credibility and reputation of the country. In addition, Bermuda's legal system, with ultimate right of appeal to the Privy Council, which is set against the background of a strong professional environment, is very important to in-house counsel.
Law firms in Bermuda have this market to themselves, because foreign firms are not permitted to set up here, although there is probably not a high enough flow of work to interest one of the big US or UK players into the market. In Bermuda, the relatively low number of annual incorporations – between 1,200 and 1,500 – would account for only a fraction of the number from some of the other jurisdictions.
Bermuda's new immigration regulations mean that the foreign lawyers recruited from abroad can now stay for only six years, with the possibility of a three-year extension. For Bermudians, this means virtually no unemployment in the professional services sector. But, as the market is buoyant, it is able to bring professionals in from all over the world, which creates a diverse workforce that subsequently enriches the island.
Dianna Kempe is senior and managing partner at Appleby Spurling & Kempe