The Bermuda Monetary Authority (BMA) has reported that the island’s property and casualty insurance and reinsurance sector remains resilient to potential adverse impacts, based on findings from its 2023 catastrophe risk and stress-testing analysis.
The 35-page report draws on year-end 2023 data. It evaluates the capacity of Bermuda’s insurers and reinsurers to manage and absorb shocks from financial market and underwriting stress scenarios, as well as potential catastrophe losses.
The report focuses on Class 3B and Class 4 insurers, which are required to submit capital and solvency returns, including catastrophe risk management details, to the BMA.
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These returns, as per a report from The Royal Gazette, form the basis for assessing the sector's exposure to catastrophe risk and its ability to maintain capital adequacy under extreme but remote scenarios.
The BMA stated that the stress-testing results confirm the Bermuda market’s capacity to absorb financial market volatility, catastrophe events, and other underwriting loss scenarios. Despite hypothetical severe losses, Bermuda insurers and reinsurers demonstrated sufficient capital to meet policyholder obligations and regulatory requirements.
However, the BMA cautioned that the analysis is limited to specific classes of insurers and excludes special purpose insurers and long-term (life) insurers, making the findings reflective of only a segment of the industry.
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The report highlights a year-over-year increase in gross loss exposure assumed by Bermuda insurers, rising 2.69% from US$199.11 billion in 2022 to US$204.46 billion in 2023. Meanwhile, ceded losses decreased 2.63%, from US$121.67 billion in 2022 to US$118.47 billion in 2023.
This resulted in an 11.04% increase in net loss exposure, from US$77.44 billion in 2022 to US$85.99 billion in 2023.
The BMA also noted that while these results underline the sector’s resilience, they represent only a portion of the Bermuda market and do not encompass all forms of catastrophe risks.
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