The business of uncertainty
Innovation is not new in Bermuda. Its form has evolved from the birth of captives; through record catastrophe reinsurance responses and an expanding insurance-linked securities market, the island has repeatedly demonstrated an ability to evolve ahead of many larger financial centres.
For Matt Britten, partner at PwC Bermuda, that success distils down to the soil of Bermuda’s foundations. “There are a number of important attributes that make Bermuda strong as a financial services jurisdiction. But, if I had to say what its greatest strength is, I’d have to put it down to the collaborative working relationship between government, regulator and business.”
It is a familiar observation, but Britten adds an important distinction.
He notes that the Bermuda Monetary Authority (BMA) offers “very rigorous but risk-based regulation” that is recognised internationally, while also being described as “comparably more agile, proactive and quick to support the regulation of new markets.”
Whether responding to cyber risk, climate change or the emergence of digital asset businesses, the regulator has consistently shown a willingness to engage with new challenges before they become established.
The result is a jurisdiction where innovation is not viewed as existing in opposition to governance, but as something made possible by it. That philosophy runs through Britten’s approach to today’s market.
A different value proposition
Bermuda’s regulatory model has evolved; Britten believes reinsurance business models are beginning to do the same. Rather than remaining as providers of capital after an event has occurred, he sees increasing scope for reinsurers to help clients reduce the likelihood and severity of losses before they happen.
“I think there’s significant scope for reinsurers to expand their value proposition outside of just risk transfer to further help clients prevent and reduce loss cost rather than just transfer the risk itself,” he said.
He argues that the industry’s role in risk mitigation is often underappreciated, despite decades of investment in analytics, modelling and risk expertise. Against a backdrop of accelerating technological change, climate volatility and geopolitical uncertainty, those capabilities might become as valuable as the balance sheet itself.
The reinsurer of the future, in Britten’s view, is likely to combine capital with intelligence, moving further towards becoming a risk management partner rather than simply a provider of protection.
The uncomfortable challenge of success
If the market has one immediate strategic challenge, it is an abundance of capital. As pricing pressure begins to emerge in parts of the market, many companies find themselves holding surplus capital generated during several profitable years, as they shrink top line to avoid writing business that is considered below rate adequacy.
That creates a deceptively difficult problem: “The challenge that arises for many boards and management teams is now determining how or what they are going to do with that excess capital?”
None of the available answers is straightforward.
As pricing begins to soften, pushing to grow premium volume risks compromising underwriting discipline. Acquisitions might prove strategically attractive, but suitable targets remain limited. “Each of these has its own challenges in the current environment,” Britten said.
Even share buybacks, which are often viewed positively by markets to support return on equity, require careful communication as they can prompt investors to question whether management sees opportunities ahead. “When you buy back too much stock you have to be careful around your messaging, especially what is it saying to the market about what you think your own growth prospects are?”
For larger diversified groups, reallocating capital internally offers another option. For many others, however, capital deployment has become one of the defining boardroom conversations of the current cycle.
And beyond that still remains the question of where that top-line business is going if reinsurers are walking away from renewals where rate adequacy is not met.
Interconnectivity threatens diversification
The same theme of changing assumptions appears in risk management. Diversification remains fundamental to reinsurance, allowing companies to reduce portfolio volatility by combining largely independent risks. But Britten argues that assumption deserves increasing scrutiny.
“When risks that were once considered largely independent start to become interconnected, that diversification benefit obviously starts to erode,” he explained.
Cyber incidents, cloud infrastructure failures, geopolitical events and climate-related risks increasingly have the potential to generate losses across multiple business lines simultaneously. Most reinsurers, he stressed, have recognised, evaluated and measured correlations for many years. The challenge now is that historical relationships alone are becoming less reliable.
The more advanced firms are responding by adopting dynamic rather than static approaches to risk appetite and exposure management: “They’re not just relying on historic data to determine correlations now; they’re really thinking about predictions on how these things could play out.”
That means more agile and frequent updates to correlation assumptions, broader stress-testing and increasingly sophisticated views of accumulation risk extending well beyond traditional geographic or line-of-business concentrations.
It also requires governance to evolve alongside risk. Boards, Britten argues, cannot simply oversee these emerging issues from a distance. They need collective expertise that reflects the changing landscape, whether in AI, cyber security, climate science or large-scale business transformation.
Governance that creates value
This is perhaps Britten’s strongest theme throughout the conversation. Too often, governance and strategy become separate exercises. Frameworks can encourage organisations to think in silos: strategy is set, then risk is assessed, then governance provides oversight.
Britten believes leading reinsurers reverse that logic. “You’ve got to make sure that the setting of strategy and the management of risk are not seen as distinct exercises. The companies who’ve been successful in this area have integrated or linked governance directly with strategy,” he said.
In practice, that means every strategic decision becomes a question of balancing risk against reward, rather than pursuing one and managing the other afterwards. “A lot of leading companies see their strategy as supported by a series of choices where both risk and rewards have been evaluated to drive decisions that actually facilitate a strategy.”
The distinction becomes increasingly important as the industry’s risk landscape evolves. Take the growing interconnectivity of risk. It is no longer enough to simply recognise that correlations exist between different exposures. Those changing relationships must influence underwriting decisions, capital allocation and pricing. That is governance creating commercial value rather than simply satisfying oversight requirements.
It also helps explain why governance has become a competitive advantage rather than an administrative necessity. If portfolio decisions, underwriting strategy and risk appetite are genuinely connected, organisations can respond to changing conditions more quickly and with greater confidence, because the mechanisms for evaluating risk are already embedded in the way decisions are made.
Ultimately, Britten sees governance not as a brake on innovation but as the discipline that allows companies to innovate responsibly. In a market facing technological disruption, shifting capital dynamics and increasingly interconnected risks, that discipline might prove just as valuable as speed.
AI’s promise and its reality
AI inevitably dominates conversations across financial services, but Britten offers a notably measured assessment. “I think that most firms are actually still at a relatively early stage. Channelling Churchill, he said: “Maybe we are at the end of the beginning, rather than the beginning of the end.”
Despite considerable investment, Britten was clear: “We’re certainly not at a point where we’re seeing a clear link of improved financial metrics and the deployment of AI. According to PwC’s 2026 Global CEO Survey only one-in-eight (12%) CEOs say AI has delivered both cost and revenue benefits.”
But that does not mean progress has been absent. Current applications are generating genuine operational benefits in areas including bordereaux ingestion, policy wording analysis and coding support for catastrophe models.
Britten identified underwriting workflow as the area generating the greatest excitement: “If we increase the speed at which submissions can be analysed and account packages can be prepared, we’re going to increase the number of submissions that a company can review.”
Much public discussion around AI focuses on fear-mongering about replacing people, particularly at entry and junior levels. Britten instead describes technology that enhances underwriting judgment rather than substitutes for it.
Rather than lowering headcount, underwriters gain the capacity to assess more opportunities, prioritise submissions earlier and ultimately improve risk selection, delivering better results and expanding business capacity.
The harder question: proving value
Where many organisations are now struggling, however, is in demonstrating return on investment. After several years of AI experimentation, boards are beginning to ask more searching questions: “What is the return on the investment made to date?”
Britten expressed that the answer is proving harder than many anticipated, with “many companies struggling to measure the ROI”.
Further, PwC’s survey points to a growing divide between companies piloting AI and those deploying it at scale. CEOs reporting both cost and revenue gains are two to three times more likely to say they have embedded AI extensively across products and services, demand generation and strategic decision-making.
The benefits often appear obvious. Processes become faster. Analysis becomes more efficient. Staff save time. But translating those improvements into measurable financial outcomes is considerably more difficult.
“The measurement of the benefit is quite tricky. Boards and investors are going to want to see actual data about how AI is translated into an ROI,” Britten said. For companies beginning their AI journey today, he believes that measurement should be designed from the outset rather than reconstructed retrospectively.
Alongside walking a tightrope to balance the maximum benefits of AI while minimising the operational risk introducing new technologies can carry, Britten is clear on his stance to overcome the provability or ROI predicament as well as reinforcing the driver for innovation.
Britten said: “It starts with clearly defining what your desired outcome actually is or what problem you’re trying to solve. When you have the desired outcome, you can then estimate what that benefit is and determine what the associated risks are. If you’re trying to determine that balance upfront, you can actively measure the benefit and recognise what the risks are as you innovate.”
Technology is only as good as its foundations
If AI has a limiting factor, Britten believes it is unlikely to be the technology itself. Instead, the biggest obstacles remain familiar: “Data and legacy technology are probably the biggest barriers to successful AI adoption.”
Reinsurers have long wrestled with fragmented data arriving from multiple cedants, stored across disconnected legacy systems and supplemented by vast quantities of valuable information trapped inside contracts, emails and reports. “The quality of your output is highly dependent on the quality of your inputs,” Britten said.
The question is not simply whether companies adopt AI, but whether they can create an environment in which AI can draw on the full breadth of institutional knowledge rather than isolated pockets of information.
For many organisations, that means the biggest AI projects over the next few years might not look like AI projects at all. They will involve integrating data, modernising legacy platforms and connecting information that has accumulated over decades. That will likely require a commitment to either augment existing technology and processes or adopt a native-AI technology and new processes.
Only then can firms begin to realise the more ambitious applications of AI that executives are discussing today. Those that solve that problem, he believes, “will be best positioned to realise the full benefits of AI in the long run”.
Keeping discipline at the centre
Throughout the conversation, Britten repeatedly returns to the same underlying principle. Whether discussing capital allocation, governance, risk management or AI, success depends on clarity of purpose. Companies should begin by defining the problem they are trying to solve. Only then can they evaluate both the opportunity and the associated risks.
That disciplined approach has long characterised Bermuda’s development as an international risk centre. It may also prove to be its greatest advantage as the market enters its next phase.
Innovation will undoubtedly continue. New technologies will reshape underwriting. Business models will evolve. Fresh forms of risk will emerge. But if Britten is right, the companies that outperform will not necessarily be those moving fastest. They will be the ones making the clearest decisions.
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Matt Britten is a partner at PwC Bermuda. To find out more about PwC, visit www.pwc.com/bm/.
Read the full Bermuda:Re+ILS Annual 2026 here.
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