Bermuda re/insurers pad ’22 margins on trimmed cat loss: Fitch

Top Bermuda re/insurers improved their combined ratio by 3.5 percentage points in 2022 on 13% premium growth as cat losses, while steep, declined from the prior year, the  Fitch ratings agency said in a review of its top players from the island.

Fitch’s group of seven Bermuda re/insurers - Arch Capital, PartnerRe, AXIS Capital, Everest Re, RenassainceRe, SiriusPoint and Argo - could lay claim to "very strong" 13% growth in net written premium “driven by rate increases, as well as growth in casualty and specialty writings,” Fitch claimed.

“Fitch expects favourable market pricing and tightening terms and conditions to continue at the April (Asia-focused) reinsurance renewal, and particularly at the June/July renewal for the challenging Florida market, with supply constrained and demand growing,” analysts wrote.

Argo again stood out for premium erosion as the company sold/exited businesses and awaits its pending purchase by Brookfield.

The group of seven cut their aggregate combined ratio to 92.4% as the cat loss ratio fell from 12.2 points in 2021 to 9.8% in 2022, despite drama from Hurricane Ian, Australian floods, Storm Eunice, severe weather in France and the Russia-Ukraine war.

Underlying underwriting results were said to be flat, with an ex-cat accident-year combined ratio of 85.5% in 2022, in line with 85.4% in 2021.

Reserve releases played an increasingly positive role for the 2022 accounting. The group of seven padded their combined ratios to the tune of 2.9 points with releases in 2022, up from 1.8 points in the prior year. Only Argo suffered net provisioning, chiefly due to liability lines in the US. The group of seven was a net provision writer in 2020.

While unrealised mark to market investment losses helped to trim shareholder equity by some 14% in 2022, an investment-adjusted measure would have seen aggregate shareholders’ equity rise 4% over the year.

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