Best’s Market Segment Report: U.S.-Bermuda Reinsurers’ Results Maintain Positive Momentum

AM Best’s composite of U.S. and Bermuda reinsurers recorded its third straight year of improved underwriting profitability in 2023, according to a new report. Results benefitted from lower severity of catastrophes during the year, as well as changes made to the structures of most catastrophe reinsurance programs. As a result, catastrophe losses were borne disproportionately by primary carriers rather than their reinsurers.

The Best’s Market Segment Report, “U.S.-Bermuda Reinsurers’ Results Maintain Positive Momentum,” is part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. Additional reports, including AM Best’s ranking of top global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd’s, life/annuity, health and regional reinsurance markets, are available at Best’s Research.

According to this report, AM Best believes that the U.S.-Bermuda reinsurance composite appears poised to sustain 2023’s strong performance in 2024, assuming that predictions for highly elevated Atlantic hurricane activity do not materialize in the remaining months of the year. As has been the case for the past several years, companies in the composite possess ample capital to pursue attractive market opportunities.

The report notes that reinsurance catastrophe pricing has moderated but capacity remains selectively constrained, while strong investment results have bolstered underwriting margins. The composite’s 2023 combined ratio of 85.1 marked a was a 6.4 percentage point improvement over the prior year. Total net premiums written for the composite grew by 3.3% in 2023, down from 15.5% growth in 2022 and 19.7% in 2021.

“We expect that premiums for this U.S.-Bermuda composite will increase in 2024 to levels closer to 2023, reflecting the high ongoing demand for reinsurance capacity, bolstered by underlying exposure growth,” said Greg Dickerson, director, AM Best.

Significant realized and unrealized investment gains and higher net investment income also contributed to strong net earnings in 2023. The composite posted a 23.0% return-on-equity (ROE) ratio in 2023, versus a -2.4% ROE in 2022, when substantial pre-tax realized/unrealized investment losses more than counterbalanced the group’s solid operating performance.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=346327.

Lastly, AM Best will host its annual reinsurance market briefing at Rendez-Vous de Septembre on Sept. 8, 2024, at 10:15 a.m. (CEST) in Monte Carlo. For more information, please visit http://www3.ambest.com/rd/rd.aspx?rd=RVDS2024.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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