California wildfires drive major losses for Bermuda reinsurers
Bermuda reinsurers, facing significant losses from the California wildfires in January, are likely to see pricing declines at the mid-year 2025 reinsurance renewals, Fitch Ratings has said.
Fitch-rated Bermuda reinsurers are expected to see a four-percentage-point increase in their combined ratios due to the wildfire losses, the agency reported in its Bermuda Reinsurance Dashboard.
Fitch said the January wildfires will account for the equivalent of 60% of their total catastrophe losses for 2024.
The agency said it expected that Bermuda reinsurer rates will deteriorate in 2025 due to higher catastrophe losses, but should remain profitable.
“The group posted a 90.7% combined ratio in 2024, with 6.4 percentage points of catastrophe losses, primarily from Hurricanes Milton and Helene as well as US convective storms,” the report said. “This is increased from an 86.2% combined ratio in 2023, which had a lower 3.6pp from catastrophes.”
The report noted that the rate of reserve decreases declined in 2024, as their combined ratio fell by only 0.1 percentage point in 2024, reduced from 1.5 percentage points in 2023 and 2.4 percentage points in 2022.
“While most companies continued to report overall favourable development, Everest Group posted a sizeable $1.3 billion of reserve additions driven by US casualty business,” it said. “PartnerRe also reported adverse development in 2024 related to casualty reserves, while Aspen Insurance Holdings had an unfavourable impact from a loss portfolio transfer.”
Net premiums written grew by 14% in 2024, driven by rate increases and business growth.
The report said shareholders’ equity rose by 16% due to underwriting gains and increased investment income, offset by “a greater return of capital to shareholders supported by net earnings”.
It said SiriusPoint was the only company to record a drop in shareholders’ equity due to the company’s full repurchase of shares belonging to CM Bermuda, previously its single largest shareholder.
The companies covered by Fitch are: Arch, Aspen, AXIS, Everest, Hamilton, PartnerRe, RenaissanceRe and SiriusPoint.
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