Head Property-casualty re/insurers pull their weight

Sector had a strong 2024 but LA wildfires and softening rates add to uncertainty in 2025. 

Bermuda again demonstrated its importance to the US and global re/insurance markets when wildfires swept through Southern California in January, causing billions of dollars in insured damage. 

Bermuda re/insurers are likely to pay out as much as $10 billion in claims from the wildfires, which could account for up to one third of total insured claims. 

This is far from the first time the Bermuda re/insurance industry has paid a hefty proportion of claims for a US catastrophe. 

The Bermuda Monetary Authority, which produced the $10 billion figure from a survey of the companies it regulates, said Bermuda paid $2 billion or 20% of the insured claims for Hurricane Helene and $4 billion or 15% of the claims from Hurricane Milton in 2024. Taken with the LA wildfires, that meant Bermuda paid $16 billion in losses in less than six months. 

Those statistics demonstrate why Bermuda is such an important part of the global insurance market. Over more than three decades, the industry has been supporting insureds in the US and around the world and has paid out hundreds of millions of dollars. 

Indeed, Craig Swan, the BMA chief executive officer, reports in these pages (Page 8) that Bermuda re/insurers paid our more than $460 million in claims overall between 2016 and 2023. 

“The survey results demonstrate Bermuda’s crucial role in supplying risk capacity to the US and other regions prone to catastrophes,” he said. “The ability of US insurers to cede risk to Bermuda enables diversification of risk globally and helps stabilise insurance costs for customers residing in catastrophe danger zones.” 

Swan also noted that the difference between insured losses – estimated at between $30 billion and $50 billion – and economic losses – put at between $250 billion and $275 billion – showed that even in developed countries, the protection gap is extraordinarily wide. 

He said this underscored the need for stronger public-private partnerships and increased collaboration among regulators, insurance and other stakeholders to bridge the gap. But it also suggests there is more room to grow for Bermuda’s underwriters, who have consistently shown the ability to fill gaps in the market – while exhibiting underwriting discipline. 

That discipline may be needed now more than ever. 

“Most insurers are actively pursuing growth in 2025, resulting in improved outcomes for insureds – but also creating fierce competition among carriers. Retaining business has become more challenging as all players look to grow in a crowded landscape.” – WTW 

Property market starts to soften

A report by broker WTW released on May 12 said the hard market in property re/insurance was beginning to end and competition was increasing. 

That came after two years of successful results for Bermuda reinsurers, who enjoyed a second year of strong profits in the wake of a reset at the end of 2022 when rates, and more critically, attachment points, were increased. Terms and conditions were also tightened. 

Those increase came after another year of poor results crowned by losses incurred because of Hurricane Ian, which caused more than $50 billion of insured damage, with Bermuda companies paying out $13 billion in claims. 

However, WTW cautioned in its Insurance Marketplace Realities 2025 Spring Update that Bermuda was shifting towards renewed competition and selective growth. 

“Property markets are softening as abundant capacity returns, particularly for preferred risks,” the report said. “Casualty lines remain under pressure from litigation inflation and constrained capacity, while financial lines continue to offer stability, with D&O and cyber leading innovation. 

“Clients are increasingly structuring programmes to absorb more risk, and Bermuda remains a critical platform for complex placements and global programme execution.”  

To some degree, re/insurers are victims of their own success. Two profitable years have boosted their retained earnings, and while many have returned capital to their shareholders through dividends and share buybacks, capacity has also increased. 

After Hurricane Ian, many reinsurers moved to cut their exposure to catastrophes and thus reduce earnings volatility. However, it appears competition is increasing in this segment in Bermuda, with WTW saying: “Following the longest period of firm trading conditions in recent memory, robust competition has returned to the Bermuda property market. 

“Most insurers are actively pursuing growth in 2025, resulting in improved outcomes for insureds – but also creating fierce competition among carriers. 

“Retaining business has become more challenging as all players look to grow in a crowded landscape.

“The increase – arguably abundance – of capacity, especially for preferred, low-hazard occupancies, is motivating carriers to pursue new opportunities in sectors and structures that have been less attractive during harder market cycles.

“This shift is placing downward pressure on rates for cleaner accounts and pushing underwriters to expand risk appetite.” 

Casualty, where many re/insurers have experienced adverse developments from prior accident years, has seen rates continue to rise, with increases ranging from 10% to 20%. 

“The primary drivers remain capacity constraints and escalating litigation costs, including defence of large verdicts and settlements.” 

It added: “Despite new entrants to the Bermuda excess casualty market, total capacity is flat to slightly shrinking. Existing markets are retrenching, with average deployed limits now $10 million to $15 million, down from historical norms of $25 million.

“New entrants are contributing $5 million to $10 million per risk.”

Despite that, broker Price Forbes reported that Bermuda was no longer the market of “last resort” for casualty. 

“As market conditions continue to harden, Bermuda is no longer just a fallback option, it is becoming part of the frontline strategy,” Elliott Meachen, senior vice president, said in March. “The last resort narrative is fading. In its place? A market that’s collaborative, agile and ready to respond when others can’t.” 

WTW predicted that property rates could fall as much as 15% in some lines, while high hazard rates could rise up to 20%. In financial lines, it expected cyber and directors’ and officers’ rates to be in a range between flat and down five per cent, while wage and hour rates were expected to rise by between five per cent and 15% at the other end of the range. 

While the LA wildfires cut into re/insurers’ earnings in the first quarter, attention is now turning to the hurricane season, which begins on June 1. Preliminary forecasts project it will be less busy than 2024 with around nine hurricanes, of which four are expected to be category 3 or above. But it only takes one storm to make landfall in a heavily populated area to turn an earnings event into a capital event, as reinsurers know only too well. 

The increase in capacity by existing re/insurers appeared to continue to deter new companies from forming, along with the growth in capacity for insurance-linked securities, which has evolved from being an insurgent competitor to a key component in many reinsurers’ toolboxes. 

Indeed, Mereo Insurance, the start-up chaired by industry legend Brian Duperreault, which finally got off the ground in January with $700 million of capital, was notable because it launched with both a conventional property and casualty balance sheet and an ILS vehicle. 

Taxing times 

A major change for the industry in 2025 has been the introduction of the Bermuda Corporate Income Tax, which came into effect on January 1. 

Members of the Association of Bermuda Insurers and Reinsurers are expected to be the single largest contributor to the tax which levies a 15% tax on the profits of multinationals with annual sales of more than €750 million (US$830 million). 

The tax is projected to raise $180 million in the current fiscal year, but this could increase to as much as $750 million a year, according to Bermuda government estimates. 

While Bermuda-based re/insurers have accepted the tax – primarily because the global minimum tax structure means that the tax can be collected by another country where the multinational operates if it is not collected in Bermuda – there remain questions about how tax credits will be applied and about the application of deferred tax assets, which many companies applied in 2024. 

Nonetheless, the tax has been broadly accepted and in the Bermuda Government’s latest budget, it cut duty imports on fuel for electricity, construction materials, car spare parts and land tax, all of which would help to reduce the cost of living, which remains a major challenge for individuals and for employers in the re/insurance sector.

Insurance stocks were rocked along with the rest of the investment markets in April when the Trump administration levied tariffs on the rest of the world. However, by mid-May, stocks had largely recovered. 

The turmoil did not deter Aspen Insurance from successfully launching its IPO in May. The stock was over-subscribed and was priced at $30 a share, the midpoint of its range. It raised $397.5 million for its owner Apollo Global and earned a valuation of more than $3 billion when it opened above its offer price. 

This was the first IPO by a Bermuda-based company since 2023 when Fidelis and Hamilton floated their shares. 

CEO moves

A number of insurers also saw changes at the top of their operations. 

Perhaps most notably, Marc Grandisson stepped down as chief executive officer of Arch Capital. Grandisson, who had led the company since 2018, was replaced by president and chief underwriting officer Nicolas Papadopolou. 

Argo CEO Jessica (Snyder) Buss stepped down at Argo to become CEO of Open Lending where she was already chair and was succeeded by chief financial officer Alex Donahue. 

At Aon, Nicholas Moore was appointed Bermuda CEO in 2024, replacing long-standing Aon Bermuda head Joe Rego. Roman Romeo moved on as CEO of reinsurance in April and was replaced by Amanda Lyons. 

At Conduit, CEO Trevor Carney and CUO Greg Roberts both left the company this year for personal reasons. Executive chairman Neil Eckert has been appointed as chief executive officer. A permanent replacement for Roberts has not yet been announced and a search is now underway for a new chair.  

For more news on Bermuda Risk Review 2025, click here.

Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.