Some Bermuda reinsurers turning to primary lines to bolster business

Some Bermuda-based reinsurers have moved to include primary lines in their business as a way to address “lackluster” underwriting results over the past five years, S&P Global Intelligence Inc. said in a report Tuesday.

Over the past five years, Bermudian insurers and insurers reported a “weak” average combined ratio of 101.5%, with only three companies with a five-year average combined ratio below 100%.

Challenged by increases in catastrophe losses and the frequency of secondary perils such as wildfires coupled with COVID-19 and the Russian invasion of Ukraine, some reinsurers have moved to write primary property/casualty coverage, mortgage insurance, and even life insurance, S&P said.

Examples, according to S&P, include Everest Re’s multiyear plan to build its insurance book more rapidly than reinsurance; and Axis Capital Holdings Ltd., which announced it would exit property and property catastrophe reinsurance lines and focus more on building its primary specialty insurance business.

Bermudians’ insurance gross premiums written grew by 18.9% in 2021 to $31.6 billion while reinsurance gross premiums written increased 24.5% to $37.7 billion, according to S&P using company financials.

The group will also benefit from firming market conditions catalyzed in part by the losses and poor underwriting performance.

“Industry losses sparked rate increases in the past few years, which will likely continue as we head into the 2023 reinsurance renewals,” S&P said.