How Bermuda keeps a leading role in global reinsurance

A report from Kroll Bond Rating Agency (KBRA) placed focus on Bermuda's ability over the years to reinvent itself to address insurance and reinsurance market challenges, underlining its significance to the global reinsurance market.

"Today, Bermuda's role as both a seasoned reinsurance provider and a solution incubator for the global reinsurance industry continues, and Kroll Bond Rating Agency (KBRA) believes Bermuda's role is perhaps even more relevant now than ever before," read the report.

At the end of 2016, Bermuda reported combined capital and surplus of commercial P&C reinsurers was US$110bn, or, over 20% of the global traditional marketplace, based on figures published by broker Aon and cited in the report.

"Perhaps even more striking," continued the report, "is the growth in capital year-over-year. While total global traditional capital increased by 4.3%, Bermuda carriers' capital swelled by more than five times that amount, or 23.5%, during the same period. Hence, the rest of the world experienced flat y-o-y growth.

KBRA said it expects Bermuda to produce growth that is higher than the rest of the world for traditional capital and in line with the non-Bermudan market for alternative capital.

"Because of its dominance, Bermuda's growth is setting the trend for the overall market."

Looking at challenges ahead, KBRA noted, "In addition to key challenges facing the (re)insurance industry, such as cyber, Brexit, InsurTech, climate change and the continuing competitive pricing environment, the United States Tax Cuts and Jobs Act (TCJA), signed into law on December 22, 2017, may have more immediate implications for Bermuda companies."