US, Bermuda Reinsurers Saw Underwriting Results Improve in 2022

While their overall profitability deteriorated, US and Bermuda reinsurers collectively reported improved underwriting results in 2022, according to A.M. Best. It marked the group's second consecutive year of top-line growth, the rating agency said.

In a new Best's Market Segment Report, "U.S.–Bermuda Reinsurers' Technical Results Improve Amid Investment Losses," Best said its composite of 21 reinsurance groups domiciled in the United States or Bermuda experienced net premium growth of 16 percent in 2022. That followed a 20 percent gain in 2021, Best said.

The group's growth reflected an improved rate environment for most business lines, in particular for property risks, the rating agency said. Best said it expects the group's premiums to increase further this year as demand remains high and rates for key reinsurance lines continue to rise, particularly for catastrophe-exposed business.

"These favorable trends, combined with catastrophe activity that impacted primary carriers more than reinsurers during the first half of the year, suggest that the composite should be able to sustain and even improve upon 2022 results," Greg Dickerson, director at A.M. Best, said in a statement.

Despite 2022's high natural catastrophe activity, the group of US and Bermuda reinsurers posted a 2022 accident year combined ratio of 94.7 percent, a 7.5-point improvement from the 102.2 percent ratio the composite reported in 2021, Best said. The rating agency said the year-over-year improvement was largely the result of steady improvement in reinsurance pricing, terms, and conditions.

The A.M. Best report also noted that significant realized and unrealized investment losses led to an aggregate net loss for the group of US and Bermuda reinsurers in 2022, following positive net income reported in 2021. The group posted a -2.4 percent return-on-equity ratio in 2022, Best said, versus a 10.8 percent return-on-equity ratio in 2021 when the reinsurers' net income benefited from "substantial" pre-tax realized and unrealized investment gains.