A decade of Solvency II equivalence has given European insurers dependable access to Bermuda's reinsurance capacity, according to a new report that argues the EU should treat the arrangement as a model rather than an exception.
The study, Ten Years of Solvency II Equivalence, was commissioned by the Association of Bermuda Insurers and Reinsurers (ABIR) and produced by the Centre for European Policy Studies (CEPS) and the European Capital Markets Institute (ECMI).
Bermuda and Switzerland remain the only non-EU jurisdictions granted full equivalence across all three areas of Solvency II: reinsurance, group solvency and group supervision. Bermuda's status took effect from January 1, 2016, and covers its commercial insurers and reinsurers, but not its captives.
The report puts numbers on how much Europe relies on outside capacity. In 2023, reinsurance made up 18.8% of gross written premiums across the European Economic Area's (EEA) insurance and reinsurance sectors, worth €229.5 billion. Around 38% of EEA reinsurance transactions involved counterparties outside the bloc, and 21% were with jurisdictions recognised as equivalent.
Bermuda's carriers reported around €80 billion (US$93 billion) in gross claims linked to EU entities between 2016 and 2025. Across their global books, they assumed €212 billion of gross catastrophe loss exposure in 2024 while still meeting their regulatory capital requirements.
Mark Cloutier, chair of ABIR, said that without equivalence, Bermuda's reinsurers and groups would face much higher regulatory and administrative hurdles in writing European business. He added that European insurers would also find it harder to reach the counterparties, capital and expertise available on the island.
"This new Report describes in unprecedented detail the impact of Solvency II equivalence on the European Economic Area, especially in its ability to access international risk bearing capacity," said John Huff, ABIR president and chief executive.
The report's author, Apostolos Thomadakis of CEPS and ECMI, argued that the arrangement shows Europe can recognise different regimes without lowering its own standards.
"High standards simply do not have to look identical in all countries," Thomadakis said.
He said that with regulatory regimes diverging, and Europe needing more capital and risk-taking capacity, the ability to recognise comparable prudential outcomes across regimes would become more important.
Huff described the outcomes-based approach as regulators accepting that they might take different routes to the same destination. He said ABIR wanted to build on the decade of cooperation to help tackle other capital and investment issues facing the EEA.
The report's argument lands differently in London. Since Brexit, the UK has operated its own prudential regime, now Solvency UK, and sits outside the EU's equivalence framework. The EU has not granted the UK equivalence, so UK reinsurers writing European business are treated as third-country counterparties. That treatment can bring collateral and capital consequences for EU cedants that Bermuda's carriers avoid.
Much of the London market has adapted through EU-based subsidiaries, including Lloyd's Brussels operation. But the contrast is clear: Bermuda, an offshore jurisdiction, enjoys a recognition from Brussels that the UK does not. If the EU becomes more open to outcomes-based recognition, as the report urges, the question of whether that openness extends to the UK is one the London market will want answered.
For reinsurance brokers placing European cedants' programmes, equivalence is the reason Bermuda capacity can be bought with less friction over collateral and capital treatment. With 38% of EEA reinsurance transactions involving counterparties outside the bloc, and equivalent jurisdictions accounting for 21%, any weakening of that recognition would show up quickly in price and availability, particularly for property catastrophe programmes.
The report is also clearly a piece of advocacy. It was commissioned by Bermuda's own industry body at a time when European policymakers are debating capacity, the protection gap and how far to rely on offshore capital. Brokers should read it as Bermuda making its case early, and expect equivalence to feature more prominently in EU discussions on reinsurance capacity.
