Bermuda Committed to Cooperation and Compliance
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- Press Release
Bermuda Committed to Cooperation and Compliance in Global Tax Standards
Expects to Be Removed from Annex II at Next Meeting
Hamilton, Bermuda, February 28, 2022 — Following the European Union’s (EU) Code of Conduct Group including Bermuda on the state of play document (Annex II), the Bermuda Business Development Agency (BDA) and its valued partners, notes that Bermuda is committed to cooperation and compliance in relation to global tax standards. Although inclusion on Annex II has no penalty consequences, nor does it trigger any EU measures unlike Annex I, the BDA looks forward to being removed at the next meeting.
Bermuda has already fulfilled all the commitments related to the required exchanges of information recommended by the Organisation for Economic Cooperation and Development (OECD) Forum for Harmful Tax Practices (FHTP) and looks forward to the OECD FHTP officially removing the relevant recommendation at its upcoming meeting in April. This should result in Bermuda being removed from Annex II at the next EU Economic and Financial Affairs Council (ECOFIN) meeting in October.
David Hart, BDA CEO, said, “Bermuda prides itself on being a blue-chip financial services jurisdiction, particularly around global (re)insurance, and is committed to cooperation and compliance in global tax standards. According to the Bermuda Monetary Authority’s (BMA) 2020 Annual Report, Bermuda’s (re)insurance market was home to over 1,100 (re)insurers writing gross premiums of roughly US$197.5 billion and holding capital and surplus of roughly US$313.5 billion. As a result, Bermuda is an active contributor to the EU, and is a global leader in regulation and technical compliance.”
According to commercial market claims data collected in June 2021 by the BMA, Bermuda (re)insurers paid out US$29.3 billion to EU policyholders and cedants for property and casualty losses and life insurance claims during the five-year period from 2016 to 2020. In addition, a 2017 survey by the BMA showed that during the 20-year period from 1997 to 2016, Bermuda (re)insurers paid out US$35.9 billion to EU policyholders and cedants. These two surveys, when taken together, show that Bermuda (re)insurers paid out over US$60 billion to EU policyholders and cedants since 1997.
In November 2015, the European Commission declared the BMA’s commercial (re)insurance regulatory regime to be fully equivalent to the EU’s Solvency II framework – one of only two third countries deemed to be fully equivalent across all three areas of Solvency II.
In addition, in January 2020, Bermuda was confirmed as a global leader in Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) after our regulatory regime was assessed by the Caribbean Financial Action Task Force (CFATF), and the global inter-governmental Financial Action Task Force (FATF). Out of the more than 75 Mutual Evaluation Reviews (MERs) published at that time, Bermuda ranked first against the technical compliance requirements, with 39 of the 40 FATF Recommendations rated as compliant or largely compliant; was in the top six for overall level of effectiveness; and was one of only two jurisdictions with a high level of effectiveness in relation to its risk assessment and domestic coordination mechanisms.
John Huff, CEO of Association of Bermuda Insurers & Reinsurers (ABIR) said, “Bermuda’s leading insurers and reinsurers support the priority of people and processes to fulfill international commitments on governance and transparency and anticipate international recognition of Bermuda’s progress. As the initial Bermuda group encouraging an economic substance regime, ABIR members appreciate Bermuda’s rich tradition of leading on international standards and the benefits to the Bermuda economy of the elimination of less than compliant entities. ABIR members have led the Bermuda economy with $8.5 billion of economic substance contribution in the last decade driven by salaries, services and physical presence on island and look forward to full economic substance implementation to further support the local economy.”
Richard Winchell, Executive Director, Association of Bermuda International Companies (ABIC) said, “We are very disappointed to see that the EU Code of Conduct group has placed Bermuda on Annex II. Bermuda is an internationally preferred domicile, our companies meet and exceed economic substance measures, we are a world leader in AML/ATF scoring and we are committed to transparency. We understand that the OECD FHTP Forum will, during their next meeting in April, review Bermuda’s progress with a view to removing the recommendation pertaining to the exchange of information. It is then anticipated that Bermuda’s commitment to address the recommendation will be removed from Annex II during the next EU Council meeting scheduled for October. “
Martin Laframboise, Executive Director, Bermuda International Long-Term Insurers and Reinsurers (BILTIR), said, “Bermuda’s life sector has experienced healthy growth in recent years, thanks to the island’s strong regulatory environment that protect our cedants and policyholders. Bermuda has been globally recognised as a premier financial jurisdiction, evidenced by its full Solvency II equivalency since 2016, National Association of Insurance Commissioners (NAIC) Qualified Jurisdiction status since 2015, and NAIC Reciprocal Jurisdiction status since 2019. Bermuda has been consistently recognised for its transparency and adherence to global tax reporting, AML/ATF, and economic substance compliance requirements. BILTIR fully supports the actions of the Bermuda Government in addressing the FHTP recommendations. We anticipate a positive response from the FHTP, as Bermuda continues to cooperate with the Code of Conduct Group and comply with the EU’s tax governance criteria.”