Bermuda re/insurers will face earnings pressure in 2016: Fitch


Bermuda re/insurers face a negative sector outlook due to increased capital supply and sluggish demand, according to Fitch Ratings.

The rating agency said that these issues will continue to push pricing lower and pressure 2016 earnings in its new Bermuda Market Re/Insurance Dashboard. 

Fitch said the sector has embraced mergers and acquisition (M&A) activity to combat market stress, but continued consolidation may have only a limited impact on supply challenges.

The firm expects consolidation in the Bermuda re/insurance market to continue into 2016 as companies seek to enhance scale while underwriting and investment pressure persists. The majority of Bermuda re/insurer ratings should be stable as declines in earnings will be within the tolerances of current ratings.

Bermuda re/insurers have so far been resilient and despite weakening earnings, they maintain strong capitalisation, favourable but shrinking reserve redundancies and modest premium growth, according to Fitch.

Fitch Ratings, Bermuda, North America

Bermuda Re