Bermuda/US re/insurers maintain underwriting profitability amid high cat losses: Fitch

Fitch has released its Peer Credit Analysis for Bermuda/US re/insurers, revealing that all companies maintained underwriting profitability in 2024, despite increases in combined ratios due to higher catastrophe losses.

The peer group includes Arch Capital Group Ltd., SiriusPoint Ltd., Hamilton Insurance Group Ltd., Ascot Group Limited, and RenaissanceRe Holdings Ltd.

Looking ahead to 2025, Fitch expects results to come under pressure from California wildfires and a slight weakening in underlying results, as the market pricing cycle has passed its peak. However, the underwriting environment remains favourable.

The Insurer Financial Strength (IFS) ratings across the group vary: Arch is rated ‘AA–’, Ascot and RenaissanceRe both at ‘A+’, and Hamilton and SiriusPoint at ‘A–’.

Fitch noted that Arch’s financial performance and earnings score of ‘aa–’ is stronger than peers, supported by consistent underwriting and net income profitability over its 23-year history, along with very low combined ratios in its mortgage segment.

SiriusPoint has a Positive Rating Outlook, reflecting significant improvement in underwriting performance, driven by portfolio repositioning and the exit from non-core lines to enhance profitability and reduce volatility.

Capitalisation and leverage remain key credit factors for the group, with scores in the ‘aa’, ‘a+’, and ‘a’ levels, which support the current ratings and carry greater rating influence for each company.

The group’s capital adequacy was assessed as ‘Strong’ to ‘Extremely Strong’ at year-end 2024. Financial leverage ratios across the companies ranged from 6% to 27%, considered low to moderate.

Fitch views Arch’s business profile as ‘Favourable’ (aligned with its ‘aa–’ credit factor score), while Ascot, Hamilton, RenaissanceRe, and SiriusPoint are considered ‘Moderate’ (‘a’ category credit factor score).

The companies in this group write a varying amount of reinsurance and primary insurance business, diversified by geography and product. RenaissanceRe operates as a pure reinsurer, though it also writes excess and surplus lines insurance through delegated authority arrangements. The other firms maintain more balanced re/insurance portfolios. Arch also benefits from sizeable operations with its primary mortgage insurance business.

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