Doing Business in Bermuda |
Today, insurance tops that list. Bermuda remains a synonym for prestige and stands unchallenged as the world’s premier tourist destination. Its friendly people are equally renowned. And the physical beauty of the island continues to set it apart from most other holiday spots. But in every corner of the world, Bermuda’s business industry, and most specifically its insurance sector now rank alongside the Island’s traditional charms. The international offshore company was invented on the Island in 1935 and more than 12,000 offshore companies and partnerships now call Bermuda home. Bermuda’s international business industry is like an exclusive club. The great majority of the Fortune 100 largest companies in the United States have businesses on the Island. As many, or more, private jets ferry business people in and out of Bermuda as commercial flights. The Island is a hub for business interests around the globe. Bermuda’s rise in international business would not have been possible if the Island had not developed a sophisticated infrastructure, a pool of talented and willing people, and a “can do” attitude that makes doing business in Bermuda just about as easy as doing business anywhere in the world. Everything the business person needs can be found with difficulty in the City of Hamilton. For example, Bermuda now has more than 1,200 qualified accountants and attorneys at work. Two Bermuda law firms lead the offshore world, with offices around the globe, bringing the Bermuda brand to places as diverse as Hong Kong, London and other islands in the Caribbean. Business in Bermuda is conducted much like any other relationships. The Island’s small size makes reputation as important as financial capacity. Here, a man’s word is still his bond, and there is no room for dishonesty of any kind. Newcomers learn very quickly that the grapevine is their most powerful ally. The City of Hamilton The town of Hamilton was founded on 30 June 1793 and became Bermuda’s capital in January 1815, about six months before Napoleon met his Waterloo. The City is small, with a resident population of about 1,100, and an average daytime population nearer 20,000, including the Island’s many visitors. Half a million visitors arrive in Bermuda each year, by cruise ship and airplane, and almost all of them visit Hamilton during their trip. The City is a port, through which flow both human and containerised cargos. The centre of the city comprises about half a dozen blocks square. The majority of Bermuda’s international business takes place in Hamilton, putting everything the business person needs within a few blocks’ walking distance. Hamilton’s relatively small size — 177 acres in total — allow for a remarkable focus on business and its successful execution. In Hamilton, within a few blocks of each other, are many of the world’s largest insurance and reinsurance companies, mutual funds, insurance brokers, underwriters, lawyers, accountants, actuaries and international trading companies. Banking is limited to Bermudian-owned entities, with one exception, but its size naturally matches that of the business conducted on the Island. About 400 of Bermuda’s 1,500 insurance companies maintain a physical presence on the Island, almost all of them in Hamilton. Surrounding them are most of the Island’s other business ventures and the myriad companies who supply services to them and to the international business world beyond Bermuda’s shores. The city has any number of restaurants. Italian food is best represented, but Chinese, French, Mexican, West Indian and — of course — Bermudian cuisine are all easy to find in “town”, as Bermudians confusingly call the city. Local fish is usually available, and well worth trying. For culture, the annual Bermuda Festival is held in January and February and the Bermuda International Film Festival in May. The Island becomes a hub of creativity when the Bermuda Music Festival takes place in September. The city is home to several drama societies and boasts three fine dance schools and several schools of music. Displays of dance, music and drama are staged regularly at City Hall and other venues. Hamilton also has two movie theatres showing first-run movies at the same time as they are seen on the U.S. eastern Seaboard. Two other movie theatres are at the ends of the Island, St. George’s and Dockyard. Accountants More than 650 men and women hold down accounting positions in Bermuda that require formal training and qualification, and perhaps three times as many people work as bookkeepers and auditors, or in other support positions. The major public accounting firms are all represented on the Island. Some have headquartered themselves here. Each of the larger firms is associated with one of the major international accounting practices worldwide. Smaller partnerships and sole practitioners are also thick on the ground. More than half the total number of accountants in Bermuda is expatriate, working on temporary permits, usually for two or three years. The large firms cycle their staff, Bermudian and expatriate, though various worldwide offices. Bermuda law requires company financial statements to be drawn up according to the Generally Accepted Accounting Principles (GAAP) of any of the major countries. American, Canadian and British GAAP are among the most widely used by Bermuda companies. The Institute of Chartered Accountants of Bermuda is affiliated with its Canadian counterpart. Other branches of the profession are also well represented in Bermuda. Attorneys Bermuda has a disproportionately large legal community, and offers a range of services no other community of 60,000 anywhere in the world could begin to match. Bermuda has several major law firms, offering a range of services that extends far beyond mere advice. Supporting the lawyers are batteries of qualified Chartered Secretaries, litigators and professionals in related fields, from drafting a will to setting up the affairs of the largest international companies. International law is as widely practiced as Bermuda law. British law forms the basis of Bermuda law, although a separate body of local law has developed over the years. The large firms and a number of the smaller firms have second- and third-generation Bermudian attorneys working in their offices. Many Bermuda firms are members of international legal organisations. This way, if a client has multi-national needs, the Bermuda firms can liaise with attorneys of equally high standing anywhere in the world. The larger Bermuda law firms have their own in-house trust and administration companies, and provide a complete range of trustee and administrative services. Banking Bermuda has four licensed banks, The Bank of Bermuda and The Bank of Butterfield are both more than 100 years old — Butterfield, the oldest, will celebrate its 150th anniversary in 1998. Bank of Bermuda was purchased by HSBC, the world’s largest bank by market capitalisation, and is to be the focus of HSBC’s worldwide trust operations. Bermuda Commercial Bank, established about 30 years ago, limits itself to corporate business. Capital G offers a broad range of banking services and is forming partnerships with other financial institutions to broaden its appeal. The four licensed banks have balance sheet assets of over $16 billion, small by international standards, but growth for its own sake has never been a goal. They also hold off-balance sheet assets worth well over $100 billion, under custodial arrangements. The banks’ scale is limited by the size of Bermuda’s retail market, the careful rate at which Bermuda grows its business sector, and Bermudian law limiting the ownership of banks by non-Bermudians to a maximum of 40 percent. The banks are continuing an outward expansion that has allowed them to be quoted on overseas exchanges. The Bermuda banks maintain international offices around the world, in many other offshore jurisdictions, as well as New York, Hong Kong and London, England. With decades of service, the banks have developed a remarkable degree of sophistication and experience. Bermuda banks maintain families of offshore mutual funds, and each offers diverse account services. Bank of Bermuda, through its affiliation with HSBC, is part of a global network. Butterfield has adopted a strategy of expansion in the Caribbean. Bermudian investment houses operate alongside the banks, offering all the services a local bank or stockbroker might offer. The largest of these, Lines Overseas Management, is also represented in several other offshore jurisdictions. Bermuda is also home to a number of overseas banks that service their international clientele from Bermuda, with well-known names such as Lombard Odier and Schroders. Trusts and Trustees The provision and service of trusts have for a long time been a core business for Bermuda, where trusts are employed to achieve a variety of personal and business planning objectives. The trust is a concept developed under English law, in which the owner of assets can transfer title to the custodianship of a trustee, who then uses the assets in the way the original owner has directed. Trusts can be used to make provision for spouses and dependents; to protect assets; to keep taxes to a minimum; to create charities; and to provide pension plans and the like. A range of trust vehicles is permitted in Bermuda, for all manner of reasons. In most individual circumstances, the beneficiaries of trusts tend to be family members or charities. Corporate trusts serve a wider range of similarly-grounded needs, but on a larger scale. Bermuda administers the assets of hundreds of international mutual funds, whose managers invest, but do not administer, their clients’ pooled capital. Bermuda has a strong corps of trust service providers, who are licensed and closely regulated by the Bermuda Monetary Authority. The larger law firms own trust companies, staffed by professionals who work on nothing but trust business. The large accounting firms, who are all linked to their large international counterparts, also provide trustee services. Bermuda’s banks, too, offer a range of trust services — for the banks, trust has long been an important service. The Bermuda Association of Licensed Trustees has been formed to address issues in the trust area and keep members informed of the latest developments. Telecommunications Bermuda has been connected to the outside world by cable for more than 100 years. One of the keys to Bermuda’s post-War development has been telecommunications. The Island is undergoing a continuing revolution in the provision of telecommunications service as industry deregulation proceeds. Two long-distance servers now compete. Cable & Wireless, the British giant, which is particularly strong in the mid-Atlantic and Caribbean regions, operates via a locally-owned company in Bermuda. It has now been joined by TeleBermuda International, which is constructing a global telecommunications system. Others hope to join the fray. Both companies sell pre-paid telephone calling cards, which enable you to make any telephone in Bermuda your own. The cards come in various denominations, and for the regular visitor, there are rechargeable cards. Many people who visit Bermuda buy a card just to keep as a souvenir. Coin-operated telephones are to be found all over the Island. Domestically, the Bermuda Telephone Company, long the sole provider of local service, is also being challenged by several companies who offer a range of cellular services. Bermudians, in part because of the Island’s remoteness, are the world’s most prolific telephone callers. Cell phone usage is as high as anywhere in the world. Everyone, from the chief executives of giant international insurers to teenagers, has a cell phone. The use of BlackBerries and other hand-held equipment is widespread. Bermuda has several Internet service providers, keeping the Island one of the most interesting places in the world to visit on the World Wide Web. As you’d expect from a technologically sophisticated community, Bermuda is a riot of Web sites and information. The daily newspaper, The Royal Gazette, and both weekly newspapers are published on the Net and accessed daily by Bermuda-lovers everywhere. Businesses run a variety of intranets and extranets from Bermuda. Larger financial institutions maintain round-the-clock networks, tying their distant locations in to the Bermuda home office. Companies that are subsidiaries of companies overseas can be data-linked to their parent company by a variety of means. Local Insurance Companies A number of local insurers thrive alongside the international sector, providing insurance directly to the Bermuda market, which the international companies are not permitted to do. The Bermuda insurers are long-established companies, in business for decades, providing a complete range of coverage. Car, bike and boat insurance is available, as is real estate and commercial coverage. A full range of commercial insurance is also offered, including life insurance, health, dental and disability insurance for employees and public liability and other workplace coverages. Bermuda’s remote location requires local insurers to offer special services such as hurricane insurance, but they also offer a range of investment products and services such as pension management and administration. Most of the larger local insurers have subsidiary companies that provide management services to international insurance companies. The management companies allow overseas companies to operate their own captive insurers in Bermuda, with local administration reliably managed by a Bermuda company with substantial experience. Computer Consultants Bermuda probably has more computers per inhabitant than any other country in the world. Internet connections, mostly broadband, reach throughout the business community and are widely used in homes throughout the Island. As you would expect, a considerable industry has grown up to support the Island’s individual and corporate computer users. A number of suppliers sell and service the familiar brand names, such as IBM, Dell, Compaq, HP, Gateway and others. Some dealers have rights to sell and repair particular brands, while other firms cover a range of services for almost any machine. Bermuda is as up-to-the-minute on the computer scene as the most advanced cities in the world. The Bermuda College and other education facilities offer a range of “how-to” courses to help beginners and advanced users learn every aspect of computers. Corporate Communications About two dozen advertising agencies, graphics firms and corporate communications consultants operate in Bermuda. Several are affiliated with the largest global firms. Women dominate this service industry in Bermuda. Several of the corporate communications companies in Bermuda are owned and managed by a groups of extraordinarily creative women. Real Estate Bermuda has about 24,000 occupied dwellings, which include studio apartments, huge mansions on private islands, and pretty much everything in between. Not just anyone can buy a home in Bermuda. Most of the housing is reserved for Bermudians; after all, they live here. Bermuda’s property tax system (called Land Tax) allows only certain homes to be sold to non-Bermudians. In practice, that means that only a few condominium apartments are available to foreign buyers. Anyone may rent a home in Bermuda. Rents are expensive, for a variety of reasons. Because a percentage of Bermuda’s workers are foreigners working temporarily in Bermuda on permits, the demand for housing can be severe. Monthly rents vary across a wide range. Lately, the construction of homes has not been able to keep pace with demand, further elevating rentals in the residential market. More than 50 real estate companies operate in Bermuda. Some of the larger agencies cover the entire market, while a number of specialist firms concentrate on sections of the market. Rentals and sales are advertised in the daily and weekly newspapers. |