A leader in international commerce, Bermuda offers a world-class business environment in a spectacular setting. Bermuda has cultivated a thriving hospitality and tourism industry over the past 100 years. However, this is no longer Bermuda’s largest economic sector. For more than 17 years, international business, a mix of insurance and reinsurance, banking, trust services and fund-administration services have been growing sectors in Bermuda’s economy. It seems that Bermudians are just as adept at looking after other people’s money as they are at looking after other people’s holidays. Most in the international business community are aware of Bermuda’s dominant position as a global financial centre. Bermuda’s intelligent balance in regulation has attracted the crème de la crème of North American and European business interests. Business and support services make up Bermuda’s biggest employer, ahead of the government, hospitality and construction sectors. Business activities, other than local banking, are concentrated in Hamilton, the city in which the offshore company as we know it today was invented almost 77 years ago by a Bermudian lawyer and banker. In addition, if you come from Europe or North America, chances are excellent that a Bermudian company insures some of your risks. Insurance companies pass on a share of their risks to others. By spreading risk, insurance companies greatly increase their probabilities of surviving massive losses, such as a Hurricane Katrina or a September 11. When insurance companies buy insurance, that business is called reinsurance, one of Bermuda’s strongest industries. Close to half of all U.S. property catastrophe risk is ultimately the responsibility of Bermudabased insurance companies, of which some 1,061 have capital of more than $182 billion and assets of more than $496 billion. Regulation Financial activity is regulated by the Bermuda Monetary Authority, virtually independent of the government. The BMA enforces the laws the government makes relating to financial transactions. Bermuda has earned a reputation for regulation that is “fair but firm.” The BMA oversees financial institutions to standards at or above those set elsewhere. Some estimates place the value of assets maintained or registered in, or traded from, Bermuda at well above $1 trillion. Most are owned internationally, registered electronically and highly mobile. Bermuda’s services in this arena rely entirely on the islands maintaining a sterling reputation. Taxes Bermuda levies no income tax, although it does have a payroll tax for those who work here. It also has no capital gains or corporate taxes. The islands are by no means tax-free, however, with property and vehicle taxes, hefty duties built into retail prices, and many smaller transaction and ownership taxes necessary to support a government that employs one in six working citizens and spends more than $1 billion a year. U. S. citizens are taxed on their worldwide income, regardless of where they earn it. For others, to take advantage of Bermuda’s lower-tax environment, they must work and live here. To do that they must supply a skill that Bermudians cannot. About one-fifth of Bermuda’s workforce is imported, since the economy creates more jobs than there are working locals. Guest workers are issued annual permits that limit them to doing the job at hand for a limited period of time. Banking Bermuda has four banking licences. Each serves a different sector of the community, with a certain amount of overlap. HSBC Bank Bermuda Limited (6 Front St., 295-4000). Bank of N.T. Butterfield & Son Limited is akin to a super-regional bank, with operations in 15 countries (65 Front St., 295-1111). Capital G is a community bank and high-level financial adviser (21– 25 Reid St., 296-6969), and Bermuda Commercial Bank Limited handles only commercial, corporate and high net worth clients (19 Par-la-Ville Road, 295-5678). Visitors do most of their business with HSBC Bank Bermuda Limited and Bank of N. T. Butterfield & Son Limited. Other than currency and change transactions and all the obvious advantages of cheques, credit cards and so on, a Bermuda bank account offers international connections and access to certain areas of the investment world that some larger jurisdictions deny their citizens. The financial behaviour of U.S. citizens, in particular, is greatly limited. A chat with a friendly banking officer in Bermuda might reveal opportunities, but all such activity must be reported to the authorities in your home country. Insurance Bermuda now ranks with New York and London as a global insurance centre, although the majority of its business is wholesale, i.e., reinsurance or “captive” insurance, which is a type of self-insurance that Bermuda pioneered. Other than playing a role in insuring millions around the world, the main contribution made by Bermuda’s insurance industry is in keeping costs down for visitors. While Bermuda is not exactly inexpensive, it would be a great deal
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