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We haven't had an invasion of multi-jurisdictional firms in Bermuda," one partner says. Unlike some other offshore jurisdictions including British Virgin Islands and Cayman Islands, where most of the dominant players in the legal market are large multi-jurisdictional firms, Bermuda's market still enjoys a good mix of large offshore firms and local ones....

We haven't had an invasion of multi-jurisdictional firms in Bermuda," one partner says. Unlike some other offshore jurisdictions including British Virgin Islands and Cayman Islands, where most of the dominant players in the legal market are large multi-jurisdictional firms, Bermuda's market still enjoys a good mix of large offshore firms and local ones. "The market in Bermuda has been dominated by the same small group of firms in the past ten to 15 years," another partner assesses. While Appleby and Conyers Dill & Pearman are both multi-jurisdictional, other major firms in Bermuda such as Attride-Stirling & Woloniecki, Cox Hallett Wilkinson, Mello Jones & Martin and Wakefield Quin are all Bermudan.

One major lateral hire that changes the landscape somewhat is the departure of Michael J Mello, the founding member and former senior partner at MJM, to Appleby. The move further boosts Appleby's presence in Bermuda and the market will wait to see how MJM adjusts.

The Companies Amendment Act 2011 enacted in December 2011 is a major development for Bermuda's legal regime. One big change in the act is that it provides an enhanced choice of corporate structures for M&A in Bermuda, with the introduction of the merger concept and the concept of a surviving company. Now the involved entities can specify which firm in the M&A deal would be the surviving company.

Another major development is the Tax Information Exchange Agreements (TIEA) with Canada, which came into force in July 2011. "Canadian companies traditionally have used Barbados captives. Now some of them have moved from Barbados to Bermuda," one partner comments. "New product lines came about because of TIEA, resulting in a good new work flow for us. Corporate attorneys in Bermuda are happy." Lawyers also note that they see more opportunities arising from Canadian firms that are setting up captives for the first time.

MAJOR LATERAL HIRES

Michael J Mello
From: MJM
To: Appleby

MAJOR LEGISLATION CHANGES

Companies Amendment Act 2011
In effect as of December 2011

RISING STARS

Appleby
Clive Langley

Conyers Dill & Pearman
Guy Cooper
Mary Ward

Cox Hallett Wilkinson
Natalie Town

CONTEXT AND TRENDS

Despite the fact that Bermuda's economy is still "a bit sluggish," lawyers report "a significant uptick in instructions" in the last 12 months compared with the previous year. The spotlight is on the insurance and reinsurance sector, which Bermuda's economy is primarily based on. "Insurance is a key driver of our financial service sector in Bermuda," one partner explains.

Lawyers report that there were a number of acquisitions and incorporations in the insurance sector over the past year. For these companies, Bermuda has a class system ranging from Class 1 to 4, with Class 4 companies being the largest. At the end of 2011, Third Point Re, a Class 4 specialty property and casualty reinsurer was formed, followed by PaCRe, another Class 4 reinsurer formed by Bermuda reinsurer Validus Holdings in conjunction with celebrated American hedge fund manager John Paulson. Bermuda's official incorporation statistics indicate that over the last five years, eight highly-capitalised reinsurers holding Class 4 licenses have selected Bermuda as their domicile, which demonstrates that Bermuda is still "the jurisdiction of choice" when capital-intensive firms are looking to set up new insurance companies.

In addition, Solvency II, a set of rules aimed at bolstering European insurers' capital, is expected to come into force in 2014. Bermuda accounts for about 40% of Europe's broker-placed property and catastrophe reinsurance business, according to statistics released by the Association of Bermuda Insurers and Reinsurers (ABIR.) "Our regulators have been working to achieve equivalency with that," one attorney comments on the Solvency II, further noting that it is a big challenge for the regulators, considering that they need to strive to ensure that Bermuda-based commercial insurers and reinsurers will not be at a competitive disadvantage when they do business in the EU. In a preliminary assessment released in October 2011, EU insurance regulator EIOPA said Bermuda's regulatory regime for big insurers mostly complied with Solvency II.

Another area of growth is high-yield bonds. "We are doing more high-yield deals," one partner remarks. "Banks no longer lend to corporations as much as they used to and there are less syndicated loans, so corporations are going to capital markets for bond issuances."

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