The importance of the insurance-linked securities industry to Bermuda’s economy has been underlined in a report on the island’s ILS market.

It is estimated that Bermudian-based ILS funds have a total economic impact on the island of $734 million.

At least 400 jobs were created in Bermuda during 2015 by the industry, a 30 per cent increase on the previous year. That is one of the findings of an economic impact study commissioned by the Bermuda Business Development Agency.

The research report, titled Leading the Way: Bermuda’s ILS Market 2016, also found the industry sphere was responsible for more than $100 million in payroll, with those employed in the sector representing 9 per cent of all people working in the island’s globally operating companies last year.

Jobs included 209 people employed by 15 funds and 188 jobs at 25 companies supporting the ILS industry directly, including all “big four” accounting firms and all top five insurance brokers.

Bermuda has the world’s largest share of cat bond listings, with more than $20 billion in assets under management, or three-quarters of global capacity, according to the report, confirming current statistics from the Bermuda Monetary Authority.

Before 2009 there were no insurance-linked securities domiciled in Bermuda.

“That year, in a move exemplary of the collaboration between government, industry and regulator, Bermuda introduced legislation allowing the creation of special purpose insurers — specifically designed to attract ILS and collateralised insurance companies to the island,” said Ross Webber, chief executive officer of the BDA.

“Since then, Bermuda has become the market leader and the recognised hub for this sort of innovation and product development.”

The study found that the island is the most popular jurisdiction to establish insurance-linked fund managers, with 38 per cent of fund assets managed by managers with head offices in Bermuda, it also noted that 26 Bermudian-based ILS deals were issued during 2015.

The survey was carried out by InsuranceLinked.com and Acumen Group.

Adam Alvarez, principal of InsuranceLinked, said: “The findings confirmed our hypothesis that Bermuda is the world’s number one choice for ILS fund managers and service providers.

“We also found Bermuda is continuing to win the war on talent. This continued inflow of new expertise will ensure Bermuda leads the way for the global ILS market for many years to come.”

Greg Wojciechowski, CEO of the Bermuda Stock Exchange and head of ILS Bermuda, said: “This report crystallises the success of those efforts and illustrates Bermuda’s strengths, its innovative nature and importance to domestic and global clients.”

The study identified three key pillars within the convergence sector, namely insurance-linked fund managers and funds, insurance-linked assets, and service providers that work with both.

Twenty-four ILS companies from a total of 34 registered in Bermuda participated in the study, representing each of the main subsectors. Polled on the future of the global ILS market, participants were confident, identifying the biggest opportunity as new products that could be accessed by ILS funds. Respondents were also optimistic about Bermuda’s ILS market, ranking it first among jurisdictions, followed by London and Zurich in joint second place.

Richard Hartley, managing director of Acumen, said: “The report demonstrates what an important part of the economy the ILS market has become to Bermuda in a relatively short space of time.”

The study arose from discussions during the BDA’s annual ILS strategy session with stakeholders.

Jereme Ramsay, business development manager at the BDA, said: “We developed a plan to measure the economic impact of this innovative asset class. The findings provide a benchmark to track Bermuda’s performance, compare against competing jurisdictions, and also market the sector and its impressive intellectual capital.”

Meanwhile, Mr Webber said: “The results of the study are certainly positive, proving the convergence sector has quickly become a pivotal and multiplying contributor to Bermuda’s overall economic health. The study is not exhaustive, so data gleaned presents a picture of the minimum contribution.”

The study can be accessed at: http://bit.ly/29R5cPV