Bermuda Law Blog

15 Oct 2013

The UK Supreme Court has recently reached a decision regarding the appeals of both Pitt v Holt and Futter v Futter which refer to the nature of the Rule in Re Hastings-Bass deceased 1974. Hastings-Bass was a case that set the precedent whereby discretionary acts by trustees may be set aside if the decisions made had unintended consequences. The unintended consequences were usually unexpected tax liabilities. Historically the Rule has been used to set aside decisions made by trustees who have have accidentally failed to take into account relevant circumstances or where they have taken incorrect professional advice. As a consequence of the Rule the trustees and beneficiaries are re-set into the position they were in before entering the adverse transaction.
13:06 / Wills, Trusts & Estates
16 Sep 2013

Before an insurance company pays out damages following an accident, one’s claim must be particularised fully. Such a claim will typically include all expenses incurred as a result of the accident, which may include damage to property and expenses for transportation. Hardip Singh v Rashed Yaqubi is a 2012 case wherein Mr. Singh sued Mr. Yaqubi for damages arising out of an accident in central London which involved Mr. Singh’s Rolls Royce. Mr. Singh, through his counsel, argued that the hire of the Rolls Royce was reasonable considering the type of work that he was in and the image that he had to maintain, elements of which included the perception of success.
17:37 / Insurance
30 Aug 2013

Bermuda is now the epicentre of the catastrophe bond/insurance linked security world. With $7 billion of these securities now listed on the Bermuda Stock Exchange, the island can claim almost half the value of the global market. Catastrophe bonds (also known as cat bonds) are risk linked securities that transfer a specified set of risks from an Insurance company which acts as a sponsor to investors through the issue of cat bonds and the trading in derivatives based on the bond. They were created and first used in the mid 1990’s in the aftermath of Hurricane Andrew and the Northridge earthquake and emerged from a need by insurance companies to alleviate some of the risk they would face if a major catastrophe occurred, which would incur damages that they could not cover by premiums and returns from investment using the premiums that they received. Typically an insurance company issues bonds through an investment bank which are then sold to investors. These bonds are inherently risky and are multi-year deals. If no catastrophe occurs, the insurance company pays a coupon to the investors who make a healthy return generally based on LIBOR plus between 3% and 20%. However if the catastrophe manifests itself the principal paid by the investors to purchase cat bond securities is forgiven and used by the sponsor to pay its claims to policy holders.
18:12 / Company & Commercial Law / Insurance
28 Aug 2013

Jennifer Haworth
Two recent announcements demonstrate that Bermuda has an important role to play in the global insurance market and is seeing growth in 2013. The Bermuda Monetary Authority (“BMA”) presented figures for the period ending July 2013 in which 47 new insurers were registered. This represents an 81% increase on last year which saw 26 new insurers registered. Interestingly, 13 of those new registrations came in the month of July alone. The BMA has indicated that the new registrations were predominantly special purpose insurers (“SPIs”). For 7 of the registered SPIs, their total projected premiums in their first year of business are expected to be over $151 million. The new registrations will cover a broad range of business areas including property catastrophe reinsurance, catastrophe bonds and life and annuity. It was also noted that the number of captives in Bermuda remains steady and has done so for the last three years. Contrary to the suggestions that captives are re-domiciling onshore, this has not been the case in Bermuda.
17:13 / Insurance
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