Bermuda reinsurers can take rate on pace to pad margins in ’23: Fitch

Bermuda-based reinsurers can take rate and tightened terms at a pace to beat inflation- and cat-driven claims with an upside gain for margins in 2023, analysts at the  Fitch ratings agency claim.

“Underwriting performance is poised to improve further this year, as accelerated premium rate increases outpace loss-cost inflation,” analysts said. Rate and terms can beat the combined punch of heightened catastrophe losses, inflation and economic uncertainties, Fitch Ratings says.

The eight Bermuda based reinsurers in Fitch’s rating sights could cut their aggregate combined ratio to 93%-94%, slightly better than the 95.0% from the first nine months of 2022 and the 95.9% recorded in 2021. Cat losses will account for 10–11 percentage points of the 2022 reading, chiefly on Hurricane Ian.

“Fitch expects pricing to remain favourable through midyear 2023 renewals, particularly in the dislocated Florida market exacerbated by Hurricane Ian,” analysts claim. January renewals saw a shift into “a true hard market” in property and select specialty lines, analysts note.

M&A among Bermuda reinsurers, called “muted” in 2022, “could resume” following favourable performance in primary specialty lines and robust reinsurance renewals, analysts suspect.

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