A recent report by AM Best that states that despite ‘tepid’ industry returns the rating agency has faith in Bermuda are indicative of the strength and reputation of the Island’s re/insurance sector, said Marty Becker, CEO of Alterra.
“The Bermuda market remains resilient and has firmly credentialed itself as a key global trading centre for our industry” said Becker. The recent AM Best report appears to be further proof of the wider industry’s faith in the Island’s capabilities.
Brad Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers added that "ABIR's members are market leaders; great innovators and totally focused on underwriting profit. They take risks that other insurers shy away from and thus provide a great, global economic contribution. The market is healthier because of ABIR members, while the robust prudential regulatory framework built by the BMA adds credibility and respect to those companies domiciled here. "
In the report released by AM Best on Monday, Bermuda re/insurance players fared well in 2012, despite returns described as ‘tepid’. The report, which covers 2012 results, calls the year a “solid year for underwriting performance” and reports that AM Best’s Bermuda market composite is in a position to post a return on equity of 10 percent, which is down from the heights of 2006 (19 percent) and 2009 (16 percent) but still comparatively attractive, particularly considering the industry’s changed perspective on returns following the financial crisis.
According to the report, the rating outlook on reinsurance business is stable, with the industry still well capitalised despite recent events and more than capable of absorbing significant losses.
The report said: “AM Best expects reasonable organic growth in capital, assuming a normal level of global catastrophe losses.” The report does raise concern that the stabilisation in re/insurance pricing may be short-lived, as there are already indications that property catastrophe pricing will be challenged to hold 2011’s rate through the renewal season, and reminds companies that they need to be realistic about their options. “Companies have to find their way one step at a time in the market they have,” reads the report, “not the market they desire to have.”
AM Best, report, Bermuda, reinsurance