Bermuda represents approximately 35% of the world’s reinsurance capacity, according to Jeffrey Manson (pictured above), senior vice president, underwriting and head of global public sector partnerships at RenaissanceRe.
Speaking at the Bermuda Risk Summit, Manson highlighted the island’s role in the global reinsurance market.
“The Bermuda market has paid around US$500 billion in property and catastrophe casualty specialty losses in the US alone, helping communities rebuild after tragic events,” he said during his remarks.
Manson noted that 2024 was another active year for natural disasters, with severe convective storms in the US and Canada, as well as hurricane activity, flooding, and earthquakes affecting multiple regions.
In a report from the Royal Gazette, he cited Aon’s 2024 catastrophe report, which recorded US$368 billion in economic losses, 60% of which were uninsured. The year marked the ninth consecutive period where global economic losses exceeded US$300 billion, ranking as the sixth costliest year on record for insurers with US$145 billion in insured losses.
Bermuda’s influence in global reinsurance is tied to its role in absorbing both primary and secondary perils, according to Manson. He pointed out that since 2000, secondary peril losses – including hail, flood, storm, and wildfire – have totaled an estimated US$1.4 trillion.
In contrast, primary perils, such as tropical cyclones, earthquakes, and windstorms, have accounted for approximately US$1 trillion in losses. Manson called for increased investment in risk mitigation strategies and resilience planning to limit losses from smaller disasters.
In 2023, member companies of the Association of Bermuda Insurers and Reinsurers (ABIR) reported a collective gross written premium of over US$171 billion, reflecting an 18% increase from US$145 billion in 2022.
Bermuda also played a pivotal role in the 7% rise of total dedicated reinsurance capital, which reached US$568 billion in 2023. Projections suggest an even larger increase for 2024.
Bermuda-based re/insurers achieved a combined ratio of approximately 85%–86% for the full year 2023, an improvement from 92.7% in 2022, indicating enhanced underwriting profitability.
With over a third of reinsurance capital now seated within the island nation, questions have naturally come up over its long-term viability and solvency. In fact, measures have been taken by regulators worldwide to know the effects offshore reinsurance – a growing solution with deep roots in Bermuda.
Moody's highlighted that since 2017, US life insurance and annuity reserves ceded offshore have surged to nearly US$0.8 trillion, with Bermuda accounting for 81% of this reinsurance activity. This trend raises concerns about increased counterparty risk and regulatory transparency.
In response to these criticisms, Bermuda's regulatory authorities and industry stakeholders have implemented measures to strengthen solvency and transparency.
The BMA said in November that it plans to mandate life insurers to publicly disclose more detailed information about their investment portfolios annually, aiming to bolster market discipline and public understanding.
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