Britain has launched a bid to muscle in on Bermuda’s money-spinning insurance-linked securities business.

Bermuda is a leader in insurance-linked securities (ILS) — but yesterday UK Chancellor of the Exchequer George Osborne signalled that Britain would change its rules in a bid to attract ILS business.

Mr Osborne used the British budget speech as a platform for a bid to make London a global centre for catastrophe bonds and other non-traditional insurance business.

And he said the UK Treasury will put forward a series of tax and regulatory changes to create an environment for ILS, used to cover risk from hurricanes and other disasters.

London remains second only to New York as a world financial centre and its insurance and brokerage businesses contributes around $45 billion to the British economy, a fifth of the total generated by the City of London.

But the Financial Times said yesterday that the centuries-old Lloyd’s of London market was falling behind its rivals and that Bermuda had emerged as “a dominant centre” for alternative types of reinsurance.

But Richard Lowther, the chief operating officer for ILS at Hiscox Re, said: “We welcome the announcement by the Chancellor of the Exchequer George Osborne supporting the growth of ILS in the UK.

“As a Bermuda-based company with strong ties to the UK, we understand that the markets can be complementary.”

He added: “Certain ILS products may have relative structural advantages, depending on the domicile and appeal to a defined investor base. Our Kiskadee ILS platform is Bermuda-domiciled and we’re proud of the growth in assets under our management.”

KPMG managing director and head of ILS Jason Carne said: “The use of third-party capital is continuing to grow and we’re getting more convergence between traditional capital and third-party players.

“If anything, it might stimulate and grow the overall market and Bermuda will continue to participate in the larger market.

“Britain could potentially become another competitor, but I actually look at it as an endorsement of the third-party capital model.”

Bermuda Stock Exchange CEO and ILS Bermuda chairman Greg Wojciechowski said: “It is logical that the global insurance and reinsurance centres, Bermuda included, should be focused on the development and growth of this industry segment in order for us to remain competitive as jurisdictions.”

The global stock of ILS at the end of 2014 was $25.2 billion, with Bermuda-issued ILS accounting for 60 per cent of the total.