Bermuda increases its dominance of the US mortgage reinsurance market

More than half of US mortgage reinsurance is backed by Bermuda’s reinsurance market, according to new analysis by the Association of Bermuda Insurers & Reinsurers (ABIR).

Bermudian reinsurers have provided increased capacity to US monoline private mortgage insurers in recent years, ABIR said. According to ABIR analysis of US National Association of Insurance Commissioners (NAIC) filings for US monoline mortgage guaranty premiums ceded, Bermuda increased its share of this business to 50.3 percent in 2020, from just under 29.5 percent in 2016.

The biggest jump occurred in 2019, when it increased to 43.8 percent, from 33.7 percent the previous year.

Marc Grandisson, chief executive officer of Arch Capital Group and chair of ABIR, noted Bermuda’s historic role in managing US natural catastrophe risks. “Now, data shows the Bermuda market is playing an increasing role in helping Americans achieve the dream of home ownership,” he said.

Grandisson emphasised the importance of mortgage insurance in the housing market, making it possible for many to get onto the property ladder without having to save up for years.

The Bermuda market is also playing a significant role in directly supporting the government sponsored entities (GSEs), Fannie Mae and Freddie Mac, and the credit risk transfer (CRT) market.

Created to enhance the flow of credit to the American housing sector, both enterprises have adapted their business models in recent years, from buying and holding credit risk to syndicating risk to well-capitalised, diversified reinsurers and capital markets providers.

ABIR members have provided significant capital to support the GSE CRT programmes in the last decade.

John Huff, CEO of ABIR, predicted there will be an increased role for reinsurance in the post-pandemic economy. “The Bermuda market is pleased to be part of the process in helping Americans from all walks of life benefit from home ownership,” he said.