A.M. Best: US-Bermuda Reinsurers Sustain Positive Momentum

A.M. Best's composite of US and Bermuda reinsurers posted a third consecutive year of improved underwriting profitability in 2023, according to a recent report. This improvement stemmed from lower catastrophe severity and restructuring of reinsurance programs, which placed a greater share of catastrophe losses on primary insurers.

The Best's Market Segment Report, "US-Bermuda Reinsurers' Results Maintain Positive Momentum," is part of A.M. Best's analysis of the global reinsurance industry. Additional reports, including A.M. Best's global ranking of reinsurance groups, and deep dives into Lloyd's, insurance-linked securities, and other sectors, are available at Best's Research.

A.M. Best anticipates that this positive trend will continue into 2024, assuming there is no severe Atlantic hurricane activity later this year. The report highlights that reinsurers in this composite maintain strong capital positions, enabling them to capitalize on market opportunities.

Reinsurance catastrophe pricing has moderated, but capacity remains tight. Strong investment returns further boosted underwriting margins. In 2023, the composite's combined ratio improved to 85.1, a 6.4 percentage point gain over 2022. Net premiums written grew by 3.3 percent, compared to 15.5 percent in 2022.

Total net earnings also surged, driven by significant realized and unrealized investment gains, contributing to a 23 percent return on equity (ROE) in 2023, a major improvement over the negative ROE of 2022.

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

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