10th September 2023
Bermudian reinsurers and insurers (re/insurers) have faced their share of difficulties in the past six years, including large natural catastrophe losses, risks from the pandemic and high inflation, and the Russia-Ukraine conflict. But it appears their poor past performance could give way to a promising future, said S&P Global Ratings in its article "Bermudian Re/Insurers Set Their Sights On A Brighter Future."
Notably, the underwriting and pricing conditions in the property and property catastrophe lines have shifted significantly in 2023 in light of the multiple years of underwriting underperformance.
The Bermudian re/insurers are reemphasising underwriting discipline, including their pricing strategies, and diversification into less volatile lines. We think these efforts have not only enabled re/insurers to absorb earnings volatility but also have yielded stronger underwriting profits, as performance in the past two years and in the first six months of 2023 indicates. This provides stability to the credit ratings.
Nevertheless, heightened natural catastrophe losses, persistently high inflation, and potential shortfalls in loss reserves could create roadblocks. S&P Global think it will be key for Bermudian re/insurers to have solid underwriting discipline, employ effective risk selection strategies, and exercise prudence in claims/reserve management.
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