Legal & General Re turned a profit of $578 million in 2019 — impressive for a company that set up in Bermuda with a couple of employees just five years ago.

The company, a subsidiary of the UK-based Legal & General Group, is a member of Bermuda’s booming life reinsurance sector.

Thomas Olunloyo, L&G Re’s chief executive officer, is confident that the growth that has seen the firm grow its assets under management to $25.2 billion can continue.

Based in offices on the ground floor of the Bermuda Commercial Bank building on Par-la-Ville Road, L&G Re has now grown its staff to about 35 and is likely to outgrow its space soon, the CEO said.

Mr Olunloyo added that last year’s earnings grew 100 per cent from 2018, having also grown 100 per cent the year before that.

The company’s primary business is pensions risk transfer. Mr Olunloyo explained: “We insure pensions, effectively taking it from the promise that corporations will offer to employees and ex-employees to an insurance company guarantee.

“We insure the pensions of more than one million individuals in the UK, so a part of their financial security in retirement is provided by L&G Re here in Bermuda. I think it’s incredible to have such an impact on so many lives.”

Most of its business emanates from the UK, where L&G is the largest asset manager, but the reinsurer also has clients in the Netherlands, Ireland, Canada and the US.

Mr Olunloyo sees great opportunities for further expansion, without about £1 trillion of pensions in the UK and $1 trillion in the US that have not yet been transferred to an insurer.

He said: “That’s a lot of liability and millions of individuals that we, as an industry, are going to be able to provide the insurance guarantee for in the long term. So the potential for growth is significant.”

Last year, L&G Re made its first transaction in the Canadian market, where there is also a $1 trillion opportunity.

He added: “There’s a lot of competition, much of it from Bermudian reinsurers. I view that as a good thing. There’s a lot of innovation going on.”

Companies like Athene Holdings, Wilton Re, Global Atlantic Re, Hannover Re and Somerset Re have all helped to fire the growth the sector has experienced in Bermuda. By the end of 2018, assets managed by the island’s long-term industry had reached nearly $500 billion.

“Bermuda started off with a lot of P&C [property and casualty] and monoline, but over the last 20 years, life has grown significantly to the point where the volume of life assets in Bermuda exceeds the volume of non-life assets,” Mr Olunloyo said.

Low interest rates and turbulent markets had created desire for certainty with retirement products that reinsurance could provide, Mr Olunloyo said. Bermuda had key advantages over rival jurisdictions that had helped it become a hub of the industry.

“We’re big believers that Bermuda offers something unique from a reinsurance perspective,” Mr Olunloyo said.

For example, the island’s third-country equivalence with the European Union’s Solvency II insurance regulations made it an attractive place to take on obligations from EU-based companies, he said.

Bermuda’s promotion to the EU’s white list of co-operative jurisdictions last month would allow the rest of the world to see what those who operate here already know: that Bermuda is an excellent place to do business, Mr Olunloyo added.

Asked about future external threats, such as the OECD-driven effort to create a global minimum tax rate, Mr Olunloyo said the industry’s reasons for being here were about much more than tax.

“There are many places where you can do reinsurance, but there are very few places with the right concentration of capital, talent, recognition and transparency,” he said.

“There will always be global threats. But as long as Bermuda retains those inherent features, then it will always be an attractive place for international business to take place.”

He added that when the US base erosion and anti-abuse tax was brought in at the start of 2018, it did not materially affect business on the island, partly because many US companies had already elected to be a US taxpayers.

“That demonstrates that there are other real drivers to do business here,” he said.

Mr Olunloyo, a British career actuary, said his business passion was innovation through technology.

Indeed, he and his team in Bermuda developed the world’s first pension risk transfer management system based on blockchain, a technology that “allows us to do very specific things that we haven’t been able to do in the past”, Mr Olunloyo said.

With the support of L&G’s head office in London and the many opportunities in the pension risk transfer market, Mr Olunloyo is confident of further growth in the coming years.

At the same time, he wants to make an impact in the community.

“Our philosophy of inclusive capitalism means that everything we do should be socially and economically useful,” he said.

“Everything we do from an educational standpoint to a green energy standpoint: that is us investing in the community to make a lasting positive impact. That is incredibly important to us and part of our business ethos and we want to live that every day.”

Attracting and nurturing local talent is a key part of this. L&G Re offers scholarships, internships and a graduate programme to develop grassroots talent. Roles at the company include actuaries, accountants, programmers and investment specialists.

Renewable energy is another area in which L&G Re wants to drive positive change on the island.

Mr Olunloyo has talked previously about the desire to build a public-private coalition to accelerate the move to green energy.

The L&G Group has invested more than $1 billion of the assets it manages in renewable energy worldwide.

Asked about progress with the coalition, Mr Olunloyo said: “A lot of work is going on and promises are being made. A lot of progress. We hope to be able to announce something in the next few weeks.”