Bad news for Bermuda as negative outlook continues
Rating agency AM Best has maintained its negative outlook on the reinsurance sector as continuing market challenges hinder the potential for positive rating actions.
This is bad news for Bermuda, one of the largest reinsurance hubs, as compression continues to bear down on investment yields and underwriting margins.
According to the rating agency, over time the lack of potential for positive rating actions may translate into negative rating pressures.
“At this point, A.M. Best’s view is longer term than the typical 12 to 18 months. While A.M. Best does not anticipate a significant number of negative outlooks or downgrades over the very near term, the market’s struggles at this point present significant longer term challenges for the industry,” said the rating agency.
It added that companies with diverse business portfolios, advanced distribution capabilities and broad geographic scope are better positioned to withstand the pressures.