Cayman and Bermuda get into a very public spat

Whilst offshore finance centres are fiercely competitive, they usually steer clear of explicitly denigrating each other in public.  As in the world of international diplomacy, overt criticisms of other jurisdictions are fairly rare and tend to be couched in polite or veiled terms. However, McKeeva Bush, the Caymanian Premier, has never been one to worry too much about such niceties and has launched an extraordinary attack on rival Bermuda, which has traditionally been the world’s leading centre for the insurance and reinsurance industry.  Speaking at the 11th annual Insurance-Linked Securities Summit, Bush said that the Cayman Islands was now a better choice and could grow in this market “without the malice, without the inhibitions of race, without the inhibitions of transport” that, by implication, he accuses Bermuda of suffering from. 

His comments come on the back of changes to immigration policy in Cayman designed to entice the insurance industry (such as immigration concessions specifically for the insurance industry, and fast-tracked application processes which may result in permits being granted in days rather than the usual weeks or months) and an indication that his government intends to offer financial concessions that will reduce operational costs compared with other financial centres.  All this comes at a time when Bermuda has adopted new capital rules which are similar to the European-led Solvency II regulation – something which some insurance industry experts believe will lose Bermuda a significant amount of insurance business, and which is believed to have come about as a result of European political pressure.

The fact that Cayman is bringing in initiatives to try to out-do Bermuda is hardly surprising – the international finance centres are all engaged in a constant competition to get an edge over their rivals and the insurance/reinsurance markets are a highly lucrative prize.  But the choice of inflammatory and grandiose language is certainly unusual and has clearly upset the Bermudans.

Apart from his jibe about malice and race, McKeeva also said that immigrants in Cayman could still build decent homes and could still own them, and crowed that “My rating is still AA3 rating – what is theirs?”. This was a reference to the downgrade of Bermuda’s sovereign credit rating last year to AA-, but in referring to it as “his” rating McKeeva Bush shows an extraordinary degree of hubris.

Bermuda’s Premier Paula Cox responded robustly to the attack, but in more measured terms, saying, “Only the naive would be foolish enough to count Bermuda out,” and that Bermudians were "fearless in representing our national interest" but "principles-based". She said “You cannot seriously hope to operate a credible, successful, premier international centre without being reputationally sound and intellectually nimble and innovative.”

Whilst some amused onlookers await the next round of the sparring match there are others who believe that at a time of economic instability and political turmoil, the smaller international financial centres should be working together to protect the offshore proposition as a whole, rather than taking pot-shots at each other.