Bermuda reinsurers thrive in hard market

The bulk of capital growth in the reinsurance sector in 2023 came from Bermuda re/insurers, which is testament to the market’s sophistication and its increasing diversity, according to the head of Bermuda’s re/insurance trade organisation. 

John Huff, chief executive officer of the Association of Bermuda Insurers and Reinsurers (ABIR), said his organisation’s members saw their gross written premium (GWP) increase to $170 billion from $145 billion in 2022.  

“Bermuda’s capital and capacity have never been more coveted.”

Combined ABIR profits jumped from $5.1 billion in 2022 to $32.3 billion in 2023 while total equity soared to $164 billion from $117.6 billion, according to the ABIR’s 2024 “International Re/insurers’ Global Underwriting Report” which was released on September 3. 

“Bermuda’s capital and capacity have never been more coveted,” Huff, a former US state insurance commissioner, who has been in charge of ABIR since 2018, told Monte Carlo Today.

He cited an August 2024 AM Best report, “Dedicated Reinsurance Capital Thrives in Hard Market”, which showed that apart from growth in Berkshire Hathaway’s reinsurance businesses, the bulk of growth had come from Bermuda. 

“Two of our largest members, RenaissanceRe and Everest, had additional operations and growth, but there will be strong growth across the board from ABIR member companies.

“Bermuda has an established 30-year runway. They are operating on all cylinders. They have seen the cycles of the market, and they know how to excel during certain times. 

“We’re seeing significant growth from some of our foundational members, where the market’s getting quite sophisticated. 

“It wasn’t that long ago that Bermuda companies couldn’t be rated by S&P, and now you’re seeing S&P 500 members coming from the Island and in the top five reinsurers in the world.” 

In past hard markets, Bermuda has seen an influx of new re/insurers forming in Bermuda to take advantage of higher rates and demand for capacity, but there was no equivalent class in 2023 and 2024. 

“Investors are instead opting for a flight to quality,” said Huff. “Two Bermuda re/insurers, Hamilton and Fidelis, held initial public offerings last year, but all publicly listed Bermuda companies recorded uplifts in capital and gross written premium. Of ABIR’s members, 92 percent of GWP was written by public companies in 2023. 

“There isn’t a surge of new startups, but there is investment in quality existing carriers,” he added. 

“This is due to the increased diversity of lines that Bermuda re/insurers write, but their expertise in natural catastrophe coverage means our member companies are in a position now to very selectively decide where they deploy that capital, and jurisdictions around the world are paying more attention to how their ceding companies can be best positioned to take advantage of international reinsurance markets.”

The advent of a new tax 

Top of the industry’s mind is the introduction of the Bermuda Corporate Income Tax next year, which is being implemented with the cooperation of industry, including the re/insurance sector. 

“We are supporting the Bermuda government’s efforts with as much technical support as we can provide,” Huff said. 

That includes the government’s establishment of a quasi-independent tax collection agency and other administrative functions. 

ABIR and other organisations are waiting to see a tax reform commission report which will recommend what taxes should be reduced as the new revenue arrives. 

Huff said ABIR was hopeful that consumption taxes, many of them funded by ABIR members, will be reduced and will lower operating costs as a result.  

“We want Bermuda to remain competitive.”

“The number one priority in our communications with government is how to reduce the cost of doing business here,” he said. “Bermuda continues to be an outlier in terms of salaries, housing, and healthcare, and it’s important to remain competitive.

“Government leaders are increasingly aware of pressures on the cost of business and the cost of living in Bermuda. There has to be a continued commitment to move the needle on this. Our companies have operational entities around the world and they can directly compare these costs. 

“We want Bermuda to remain competitive and also have the ease of doing business. Those are two major objectives as we go into this Corporate Income Tax environment,” he concluded.

John Huff is the chief executive officer of the Association of Bermuda Insurers and Reinsurers. He can be contacted at: john.huff@abir.bm 

For more news from the Rendez-Vous de Septembre (RVS) click here.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.