At a recent reinsurance seminar hosted by Kendall Freeman in Bermuda, one of the topics under discussion was the impact of the EU Reinsurance Directive that is set to be introduced in the countries of the EEA over the next two years. Of particular interest to many in the Bermuda audience was the mention by Richard Spiller of Kendall Freemen of certain provisions within the proposed EU directive that would allow reinsurance and insurance companies within the EEA to establish fully funded Special Purpose Insurance Vehicles - or "SPIVs" - to provide reinsurance. SPIVs will not be subject to the same level of regulation as traditional insurers or reinsurers and may not even need to be incorporated. SPIVs could be the EU equivalent of the Bermuda reinsurance “sidecars” that have become all the rage over the past year. Interestingly, many in the audience were unaware of the UK meaning of a spiv – ie. "a flashily dressed man who makes a living by disreputable dealings." It appears that securitisation vehicles, transformers and other forms of Alternative Risk Transfer will not simply be the domain of offshore reinsurance regimes but may, in the not too distant future, be available across all EEA jurisdictions.

An unwelcome “gustado” On a different matter, this month we also saw some rather unusual weather activity in Bermuda as guests at the Clyde & Co cocktail reception at Tuckers Point were treated to a mini Tornado (the local meteorologists referred to the event as a "gustado") that struck the east end of the island. Luckily the "gustado" caused no serious damage although one or two guests at the cocktail reception did get a little soaked....

This Viewpoint item appeared in issue 106 of JTW News - June 2006

Author: Mike Morrison - KPMG Financial Advisory Services Ltd