Despite Bermuda’s negative revision, re/insurers’ outlook remains stable


Standard & Poor’s has indicated that despite Bermuda’s revision to a negative outlook , the Island’s re/insurance industry’s counterparty credit and financial strength ratings remain unchanged.

S&P has revised its AA- outlook for Bermuda from stable to negative, but it seems that with an increasingly global footprint, the rating revision will have no material impact on Bermuda re/insurers.  

Commenting on the negative revision, S&P said “the negative outlook reflects Standard & Poor's view of the potential of a downgrade over the next two years if the country's economy fails to show signs of emerging from its contraction since 2009, if the new government's fiscal consolidation plans prove difficult to implement, or if ongoing bank loan deterioration leads to broader banking system pressure”.

S&P expressed its confidence in the Bermuda re/insurance market however, highlighting the market’s financial resilience despite cat losses and tepid investment returns.

Speaking with Bermuda:Re, Tauofik Gharib, director at S&P, said that the Bermuda re/insurance industry is well insulated from any further downgrade of Bermuda’s sovereign rating. “We view Bermuda re/insurers in terms of the business they underwrite and the assets they hold, the vast majority of which is held internationally”. As such, exposure to any Bermuda downgrade would likely be limited, he said.

Gharib added that S&P continues to view Bermuda as a leading centre for reinsurance – particularly in the property cat space – with increased diversification helping to further strengthen its international position. 

S&P, Bermuda, ratings, re/insurance

Bermuda Re