Bermuda Reinsurers Improve Underwriting Profitability: Combined Ratio at 85.3%

In the first half of 2026, Bermuda-based reinsurers reported stronger underwriting profitability. According to Fitch Ratings, the combined ratio for seven major companies stood at 85.3%, compared with 90% for full-year 2025. This improvement occurred despite increasingly competitive conditions and a 9% decline in net premiums written. This material is for informational purposes, with analysis conducted from an actuarial and risk-modeling perspective.

Drivers of Profitability

The profitability boost is largely attributed to lower catastrophe losses. Catastrophe activity added 2.8 percentage points to the combined ratio in 2026, down from 6.7 percentage points in 2025. Furthermore, favorable prior-year reserve development contributed 3.0 percentage points. However, some entities, such as Hamilton Insurance Group, reported adverse reserve development due to claims related to the Baltimore Bridge collapse.

Actuarial Analysis and Market Outlook

Actuarial analysis confirms that underlying underwriting performance remained steady. The accident-year combined ratio excluding catastrophe losses stood at 85.5% in both periods, suggesting that reported profitability gains were driven by reduced catastrophe claims rather than shifts in underlying underwriting margins. Gallagher Re reported that the sector achieved a 19.9% return on equity (ROE), the second-highest first-half result of the past decade.

Future Market Dynamics

Looking ahead, market participants should anticipate continued pressure on premium growth. Fitch expects competition to persist, forcing underwriters to maintain strict pricing discipline as capacity remains plentiful. Maintaining capital adequacy while navigating softening rates will be the primary challenge for the remainder of 2026 and into 2027.

Actuarial Conclusion: The reported profitability is driven primarily by exogenous factors (reduced catastrophe losses) rather than an expansion of underlying underwriting margins. Maintaining capital adequacy during this market softening phase requires rigorous adherence to underwriting discipline.

Source: Beinsure, 2026-10-09.