The Bermuda Insurance Market Report 2014 shows Bermudian reinsurers reaped strong earnings in 2013.

This despite increasing competition, persistently low investment yields, and a tepid economic recovery in the US and Europe. Reinsurers on the island generated strong underwriting and operating performance in 2013, thanks in part to mild catastrophe losses and favourable prior-year reserve development.

Deloitte’s report has commentary by Standard & Poor’s.

Some of the highlights include:

Bermudian reinsurers featured within the report generated a combined ratio of 85.6 per cent and a return on average equity (ROAE) of 12.9 per cent, compared with 91.5 per cent and 11. per cent respectively in 2012

• Bermuda’s share of the global reinsurance market doubled from 4 per cent in 2003 to 8 per cent in 2013

• Underwriting capital of $117.74 billion and net premiums written of $61.55 billion for 2013 compare with $96.94 billion and $47.97 billion, respectively, in 2012

• Share repurchasing in 2013 was more than 30 per cent higher than the amount repurchased in 2012 by the same group of companies

The report states the downward trend in pricing looks set to continue over the next two years. It added the recent rise in third-party capital (also known as convergence capacity) is disrupting existing business models.

Capitalization is still a credit strength and Bermudian (re)insurers benefit from strong balance sheets.

As reinsurers look to expand their size and scope to meet their clients’ needs, mergers and acquisitions will likely be the most attractive option in an unfriendly market.

The full report is available at deloitte.com/bm