Unpacking the Wealth in Bermuda

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0:32Bloomberg Audio Studios, podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. I'm just looking up right now, whether in Bermuda. Ah. 65. Oh, that's just that. That's kind of nice. Yeah. Kind of perfect. Yeah. Right now. I would say it's perfect. We're talking about Bermuda because we love checking in with leaders from all over the world to get an idea of what's happening on the ground where they are. And one of those is David Parker. He's head of business development at the Bermuda Business Development Agency. He joins us here in the Bloomberg Interactive Brokers Studio.

1:09When we think of Bermuda, at least from a business perspective, tourism now more secondary, but oftentimes we think of global finance, insurance, offshore business hub. Where's the biggest area of growth right now?

1:24David Parker:It's a great question. As you'll be aware Bermuda has always punched well above its weight as a center for risk and insurance it really is a powerhouse in that particular space that continues to be very important to our economy but there's also a focus on diversification so what other industries globally do we think have a good fit with Bermuda so we've been going big on technology family offices private wealth for example but also developing our infrastructure looking at things like the blue economy you know we're a beautiful island in the north Atlantic you know how can we leverage that from an economic perspective where it gets really interesting is the the conversions between different industries so technology you know bermuda has been focused very heavily on digital assets for example but as an insurance hub we're now seeing a lot of insurance companies embracing that space we've got businesses like realm for example and meanwhile names that provide insurance services but it was using digital assets so this conversions between some of the new economies that bermuda has been focused on further strengthening its position, its traditional position as an insurance hub.

2:26Is there a challenge or a tension with growing the economy and trying to attract new business, but also having the infrastructure there to support it? Islands are notoriously difficult to build on because you have to get those materials to the island. Not to mention they're expensive, which makes it a challenge to find employees because housing is expensive and those sorts of things. How do you balance those two things?

2:48David Parker:I think the balance is, first of all, there's been a huge push at the government level in terms of developing homegrown talent. So you don't have to find international talent if you have local talent that can fill those job opportunities. But of course, you do also have to look at international talent for speciality roles. And I think what Bermuda has been doing very well to attract international talent is putting in place initiatives and incentives to do so. So our EIRC, for example, Economic Investment Residency Certificate, comes with many benefits for individuals that are prepared to invest in Bermuda.

3:24David Parker:That investment often goes into real estate development in terms of how we apply those funds. That helps with the ongoing infrastructure requirements to accommodate more international businesses coming in, more international talent coming into the jurisdiction. So it is a jigsaw, and part of our role at the Bermuda Business Development Agency is to put all those different pieces together. you know how do we attract talent but ensure that Bermuda is well placed to accommodate such talent as well I am curious you know David as we've seen wealth really take off it feels like over the last decade five to ten years or so and we talk a lot about dispersions between the haves and have-nots but I'm just curious as many and the wealthy and the wealthy have gotten wealthier and looking for places to put their money there's competition around the globe in terms of where they can go so what do you guys have to do or Or do you find that it's a much more competitive space?

4:14And how do you think about that?

4:16David Parker:It's a great question. In Bermuda, we try not to compete. We try to identify the individuals and organizations that we think have a good fit with what Bermuda has to offer. I mean, you talk about wealthy individuals, for example. Many of them, in terms of managing risk, are looking at the portfolio across multiple jurisdictions. So the conversation that we're having might not mean moving assets and investment and their whole lives lock, stock, and barrel to Bermuda. it might be what part of their portfolio would Bermuda be a good fit. So diversification, going where it makes sense. Yeah, absolutely.

4:48David Parker:And then what are they looking for more often than not? A degree of certainty. They don't like uncertainty. And I think at a time when you're seeing a lot of volatility in the world, we offer certainty, security, safety, neutrality. I think that's appealing to a lot of wealthy individuals. We'll continue on that front because there is a lot of uncertainty and there's a lot of geopolitical uncertainty. and, you know, people moving around, like, in terms. So what have you seen as a result of that specifically? And I'm curious about folks from the United States. I mean, there's uncertainty all around the world, and I know you guys are global, but I'm just curious, as the U.S.

5:22has kind of gone through a little bit of an upheaval, have you seen, I don't know, some kind of, you know, impact because of that?

5:29David Parker:Well, Bermuda has longstanding relationship. Or wars between Ukraine, Russia, like, even the Middle East, what we're seeing right now. Well, first of all, Bermuda has a very longstanding relationship with the United States. It's our biggest economic partner. We're just a few hundred miles off the coast of the Carolinas. It's a priority market from a BDA perspective. That's why we're in New York this week and visit the U.S. frequently on business. I think back to the conversation of volatility, what do you define as volatility? You talk about war, earthquakes, hurricanes, flooding, political uncertainty, wildfires, all these different things.

6:03David Parker:But of course, because Bermuda is a hub for reinsurance, have for risk. Very often when these different catastrophes are taking place around the world, it's where Bermuda and its industry actually steps up to support. I mean, over 500 billion, I think, in claims for catastrophes alone out of the US have gone through the reinsurance industry in Bermuda. So I'm not going to suggest that catastrophes are an opportunity for Bermuda. Catastrophes are a tragedy wherever in the world they're taking place. But Bermuda does step up in such situations. And that's where I think the industry has really developed a reputation for itself over many decades.

6:39David Parker:And some people describe Bermuda as the risk capital of the world for that very reason. What about when it comes to tourism? It's something that we mentioned at the top, but certainly secondary to these other industries and the growth that you see. What are the opportunities for tourism? I think, first of all, I always say that tourism and investment are very often linked. Today's tourist might be tomorrow's investor, or today's investor might be tomorrow's tourist. So we work very closely with the tourism authorities in Bermuda because we think there's some synergy to be gained there. Bermuda is, you know, it's an exclusive destination.

7:12David Parker:It's not a high volume destination. We don't see people flying in in their thousands. But I think as a beautiful island in the North Atlantic, close proximity to the US, just six hours flight time from London, for the right individual, it has something to offer. Beautiful pink beaches, turquoise sea, palm trees, some fantastic restaurants. I've lived in Bermuda personally for just over a year. And I don't think there's been a day where I've not discovered something new. So for a small island, it also has a lot of depth. And I think that's what people love about Bermuda. They get to come to explore Bermuda.

7:48But are there options for increasing investment in tourism there right now? Is that something that you guys are actively working on? Absolutely.

7:56David Parker:So part of our role is infrastructure development. So how do we develop the hotels, for example? How do we increase accommodation capacity? Again, not just from a tourist perspective, but also a business perspective. If we want to attract more global events to Bermuda, then we need to be able to accommodate people when they visit. So our role is both to develop a portfolio of investable projects that includes hotels and tourism, but at the same time identify investors internationally that may see opportunity in Bermuda and match the two. I am curious, you mentioned, you know, in terms of areas to grow and expand into, you mentioned the blue economy, you mentioned the technology.

8:35What technology specifically?

8:38David Parker:Specifically, obviously, is a major insurance hub. Oh, okay. We are heavily engaged with insurtechs internationally that develop solutions for the industry that we think the industry in Bermuda could benefit from. There's been a big push since 2018 when we launched DABA, the Digital Assets Business Act, on companies coming in that space, Kraken, Coinbase, to name a few. Circle, for example, have all now got a presence in Bermuda. But I often refer to Bermuda as a sandbox. Now, it's a sandbox on two levels. First of all, our regulator, the Bermuda Monetary Authority, has a regulatory sandbox where clients can come to Bermuda with new ideas, new solutions, and test them from a regulatory perspective.

9:22David Parker:But also as a small island in the North Atlantic, as I mentioned, close to the US, it's a great place for entrepreneurs, founders, innovators to test something out before scaling into bigger markets. Now, people often say to me, well, Bermuda's too small. There's no market there. And I say that's missing the point. Come to Bermuda, small population, 65 ,000, innovation-friendly, world-class regulation, test something out before you go into the big economies internationally. I have to ask, just because of the work you've been doing on prediction markets, is that something folks are testing out pretty aggressively there?

9:55Or no, not really?

9:56David Parker:I wouldn't say so much from a prediction perspective, but certainly in the tech space, in the innovation space, we're seeing a lot of activity. We're seeing both major internationals coming to Bermuda to test new ideas, but scale-ups as well. You know, smaller businesses, the less known internationally. In some cases, perhaps Bermuda would be their first port of call outside their home jurisdiction. They're looking to benefit, if you like, from the ecosystem in Bermuda, which has great depth and is very joined up from the regulatory environment. We call it the Bermuda Triangle. It's the regulator, the government and the private sector all working together to support innovation in Bermuda and help those companies to scale globally thereafter.

10:41You know, we think about the regulatory environment there and how it's a favorable regulatory environment to these industries. Over the last year in the U.S., we've seen the regulatory regime change here. And the whole idea is to make it so companies don't end up leaving the U.S. We've also seen, I think it's fair to say over the last year, economies and countries turn inward to a certain extent with trade policy and those sorts of things. How does that put your economy at risk if increasingly these countries are trying to do these things at home?

11:13David Parker:I think for us it's not necessarily about speaking to businesses in America and say, hey, relocate your operations to Bermuda. It's about Bermuda as part of their international growth. In the risk and insurance space, for example, Bermuda is regulatory compliant with the U.S. So we see some companies use Bermuda as a base from which to do business in America. Some companies in America use Bermuda as a base to do business internationally. So I think the U.S. and Bermuda complement each other. We don't necessarily see the U.S. as a source of businesses relocating. We see the U.S. as a source of businesses that are looking to expand and leverage the benefits that Bermuda has to offer.

11:53David Parker:And the same in the opposite direction. Many companies in the insurance and risk space will do something in Bermuda, get regulated with one hour eye on doing business in the U.S. and broader North American market. We should do a show from Bermuda. Yeah, we should. We'd love to invite you down, please. We actually have. I think our folks have one time years ago. Oh, I will. We'll have to revisit that. I have not done that. No, you and I did not do it. No, that sounds great. I'm officially inviting you to Bermuda. Okay, producers, are you listening? David, thank you so much. Safe travels. Thank you.

12:22David Parker, Head of Business Development at the Bermuda Business Development Agency, joining us right here in our Bloomberg Interactive Broker Studio.