Bermuda reinsurers expected improved underwriting performance in 2023 will be driven by accelerating premium rates with a market reset in pricing, terms and conditions, even amid heightened catastrophe losses, inflation and economic uncertainties, according Fitch Ratings.

More than 40 years ago, the country emerged as the leader in the development and regulation of captive insurers; today it is the home of underwriting operations for more than 30 major international insurance and reinsurance firms.

Bermuda Reinsurance Market has grown up

Bermuda Reinsurance Market has grown up in the last 20 years in response to market needs for greater worldwide access to property and casualty insurance and reinsurance. These large carriers are regulated under a separate and distinct set of requirements with a regulatory framework designed to meet international regulatory standards commensurate with their size and market scope.

Bermuda reinsurers performance in 2023: pricing, terms, conditions

Bermuda is the largest supplier of catastrophe reinsurance to US insurers. Bermuda is uniquely able to quickly match risk-taking capital with licensed insurers and reinsurers.

Underwriting performance is poised to improve further this year, as accelerated premium rate increases outpace loss-cost inflation.

The hardening market is supported by deteriorating loss-cost trends with high economic and social inflation (see How Insurers Respond to Inflationary Shocks?). (Re)insurers have demonstrated very strong underwriting discipline in an effort to improve sustainability of underlying profitability, having suffered poor performance since 2017 amid elevated catastrophe losses.

Catastrophe losses will represent 10–11 percentage points on the 2022 combined ratio, primarily from Hurricane Ian.

The 2022 combined ratio will approximate 93%-94%, slightly better than the 95% posted through 9M22 and 95.9% in 2021.

Pricing to remain favorable through midyear 2023 renewals, particularly in the dislocated Florida market exacerbated by Hurricane Ian.

Market pricing surged at the January 2023 reinsurance renewal, shifting to a true hard market in property and some specialty lines with supply constrained and demand growing. Importantly, terms and conditions saw structural changes that benefited (re)insurers.

Shareholders’ equity declined 22% in 2022 from 2021 as underwriting gains were more than offset by net unrealized investment losses on bonds as interest rates rose.

Most companies hold bonds to maturity and would thus not expect to realize losses, except under a stress liquidity event.

Bermuda sector M&A was muted in 2022, as companies favored organic growth amid increased reinsurance volatility.

Bermuda (Re)Insurance Market Key Operating Data

Financial Data ($ Mil.)    
Net Premiums Written37,74844,76334,25338,851
Net (Favorable) Prior AY Reserve Development169-701-494-670
Net Realized/Unrealized Gains/(Losses)3,0121,327914-6,583
Net Investment Income2,5453,0762,3812,153
Net Income (Loss)2,3514,6933,127-2,836
Common Shareholders’ Equity47,40246,84946,47936,52
Operating Metrics (%)    
Premium Retention Ratio76.57675.275.9
Calendar-Year Combined Ratio103.195.998.895
AY Combined Ratio102.697.6100.597.1
AY Combined Ratio, Excluding Catastrophes/Pandemic88.985.385.384.9
Market Price per Share to Book Value per Share Ratio9310895108
Sourse: Fitch Ratings, S&P Global Market Intelligence.

M&A could resume on favorable performance in primary specialty lines and robust reinsurance renewals that improved expected returns for catastrophe risk and supported (re)insurers’ equity market valuations.

Bermuda’s leading property and casualty insurers and reinsurers

  • Generate income from nearly 150 countries
  • 88% of gross premium written (GPW) by companies traded on a major stock exchange (76% of GPW by US SEC registrants)
  • Reported USD$128 billion in global gross written premium
  • Reported aggregate global capital totaling USD$140 billion
  • Assumed $208.3 billion of global gross estimated potential losses from major cat perils (combined)
  • Bermuda re-insurers make up about 36% of the global reinsurance market based on property/casualty net premiums earned, according to the most recent report of credit rating agency AM Best (2018 AM Best)
  • Employ 37,600, people in the US, over 1,400 in Bermuda, more than 5,600 in Europe, over 8,500 in the UK, approximately 37,000 in Asia, Oceania and other non-EU countries, and approximately 82,000 worldwide

TOP 20 Bermuda Reinsurers

ReinsurerNet premiums written, $mnChange %Combined ratio, %
1. Sompo International 3,415,611,2N,A,
2. Partner Re 3,194,61590,6
3. Arch Re2,311,137,893,9
4. Renaissance Re2,099,838,793,8
5. Everest Re (Bermuda)2,088,145,375,8
6. Ascot Group Limited1,981,652,597,4
7. Hannover Re Bermuda1,172,085,269,1
8. Allied World Assurance 1,106,126,6101,1
9. Chubb Tempest Re873,119,5108,7
10. Qatar Re767,6-16124,8
11. DaVinci Re682,231,4117,6
12. Fidelis Insurance Bermuda672,413,6N,A,
13. SiriusPoint Bermuda424,3N,A,121,5
14. International General Insurance382,613,177,6
15. Aspen Bermuda372,254,1126,7
16. Convex Re Limited363,3105,7128,1
17. Lancashire Insurance290,4130,2114,9
18. Markel Bermuda156,19,1125,7
19. Hiscox Insurance 150,650,650,4
20. Vermeer Re96,810,259,2
Source: S&P Global Ratings

Fitch maintains neutral fundamental sector outlooks on both global reinsurance and U.S. property & casualty insurance. These sectors include coverage for Bermuda market (re)insurers.

Is Bermuda the reinsurance capital of the world?

became the first reinsurance company to operate on the island. Now known as the “world’s risk capital”, for close to 50 years Bermuda has set itself apart as the leader in the development and regulation of captive insurers.

Why is Bermuda a reinsurance hub?

The territory offers adaptable legislation and regulation, tax efficiency, established infrastructure, and proximity to the U.S., the largest re/insurance market in the world.

What is the Bermuda insurance market?

The Bermuda insurance market was valued at $118.7 billion in 2022. The market is expected to grow at a CAGR of more than 8% from 2020 to 2025.


AUTHORS: Brian Schneider – Senior Director Fitch Ratings, Christopher Grimes – Director Fitch Ratings, Laura Kaster – Senior Director, Fitch Wire

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