New Hypo Vereinsbank/Max Re Company Set Up In Bermuda

by Robert Lee, Tax-news.com, London

01 June 2001

Germany's second largest bank, Bayerische Hypo- und Vereinsbank AG (HypoVereinsbank), and Max Re Capital Ltd) (Max Re), a Bermuda-based reinsurance company, have announced the establishment of a new company in Bermuda. Grand Central Re Limited has been incorporated as a Class 4 Bermuda insurance company with an initial shareholders’ equity of US$200m. Under the terms of the shareholders’ agreements, HypoVereinsbank has invested US$185m for 92.5 per cent of the ordinary share capital of Grand Central Re, and Max Re Capital has invested US$15m for the remaining 7.5 per cent.

Bermuda has one of the largest reinsurance markets in the world, comprising some 1,600 insurance and reinsurance companies, with total assets of over US$132bn.

Commenting on the transaction, HypoVereinsbank’s CEO for the Americas and Asia, Stephan W Bub, said: 'We are excited by the opportunities that Grand Central Re offers to HVB Group. It represents a natural extension of our financial services operations, and we are committed to participating actively in Bermuda’s innovative reinsurance marketplace.'

HypoVereinsbank specialises in mortgage banking, asset management, structured finance and selected financial market products whilst Max Re - a privately owned Bermuda holding company - offers through its operating subsidiary customised risk financing solutions to life and health insurers, property and casualty insurers, and large corporations.

Robert Cooney, Max Re President and CEO, was asked in an interview last year how he viewed the reinsurance market in Bermuda. He said: 'The life, health, and annuity is an area where Bermuda is a wonderful jurisdiction from a regulatory point of view. It is regulation that is fair, business friendly and yet strict enough to make sure that companies are will structured, well run, well managed. Obviously, the fact that the corporate tax is low is a plus, but quite frankly I think the ability to customise product and investment strategy is probably the most important reason why Bermuda is a popular domicile for reinsurance or insurance business.' Although Mr Cooney did point out certain limitations with Bermuda, such as infrastructure and not really lending itself to organisations that are labour intensive and require large numbers of employees, he said Bermuda was generally a 'great domicile for a life reinsurance company.'

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