The Bermuda market experienced blue skies in the first nine months of 2003, according to data from rating agency A.M. Best. The top 15 Bermuda-based reinsurers and insurers posted a combined ratio of 87.5% year-to-date at the end of the third quarter, for underwriting income of US$3.0 billion. Overall, the 15 companies posted net premiums of US$28.6 billion, plus US$2.3 billion of net investment income. Realized capital gains hit US$374 million. “Underlying the nine-month underwriting results for these companies is the favorable pricing and contract terms in both property and casualty classes gained over the previous year, which is now flowing to the bottom line,” the rating agency notes. “These earnings have been augmented by the absence of major catastrophe losses and, unlike their U.S. counterparts, these Bermuda companies have had no need to materially bolster reserves for prior accident years.” Commenting specifically on XL Capital, A.M. Best notes that despite adding US$184 million to reserves relative to its U.S. operations in the third quarter, the company is still reporting strong results and is well positioned to absorb even more significant reserve charges should the U.S. operations warrant them. The rating agency notes that Bermuda companies are moving more heavily into select casualty lines where premium growth is outpacing claims growth. “The Bermuda market continues to enjoy strong demand for its products and services as clients seek carriers possessing underwriting capability and strong and unencumbered balance sheets,” the report concludes.