While Bermuda companies are feeling the effects of the economic crisis, they have survived other disasters, including major hurricanes, and will come through this one as well, a Bermuda official contends.
Indeed, in regard to the financial crisis, Bermuda companies “have fared reasonably well,” according to Shelby Weldon, director of Insurance, Licensing and Authorizations with the Bermuda Monetary Authority.
“Quite obviously, we have been impacted,” he said. “We had a number of companies in one sector of our group–the financial guaranty reinsurers–significantly challenged through the subprime crisis, but a lot of that was really driven by the fact that the direct insurers in the U.S. were challenged and their business gets reinsured into Bermuda.”
He added that Bermuda has “worked very closely with those companies as well as onshore regulators to find solutions to some of those challenges, and have been quite successful with that.”
At present, he said, some of the companies are completely out from under their problems. “But we continue to work along with the companies and other regulators to insure that those companies are stable and able to honor their regulations going forward,” he added.
Most recently, Mr. Weldon said, much of the damage from an insurance perspective–which has affected most other industries as well–is pressure on company investment portfolios. The downturn in the equity markets has resulted in some asset impairment, “and we continue to monitor that,” he noted.
While all the numbers are not yet in for 2008, he added, “when we have talked to companies while doing some stress and scenario testing, a lot of them have experienced losses akin to a major hurricane event.”
While there has been an obvious impact on the balance sheet, “if Bermuda companies were able to weather the storm of major hurricane events, I suspect they'll be able to weather this storm also,” according to Mr. Weldon.
He surmised that, when the numbers are complete, “you will see–not the same level of profits reported–but I would suspect that most of the companies still would record some profits during 2008.”
And while there will be some losses as well among selected companies, he conceded, “from an insurance perspective, [Bermuda] has been pretty resilient. We have not been impacted to the extent that some of the other financial services have.”
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