Bermuda insurers face rate pressures; warns A.M. Best

The calm 2006 storm season showered benefits on Bermuda insurers, but A.M. Best is warning that last years strong performance has set the stage for increased pressure on rates as a whole.
In its 2007 Special Report: Bermuda 12-Month Financial Review, A.M. Best reported a 2006 combined ratio of 83.7, compared with a catastrophic combined ratio of 119.4 for 2005.
Underpinning the improvement was the robust level of price improvement attained in 2006 relative to U.S. catastrophe-exposed business, and the sector managed to attain a net income of $11.4 billion, reported A.M. Best.While the market has, for the most part, remained rational, the current overall consensus is that the peak of the cycle, if only temporarily sustained by the events of 2005, is now clearly in the rearview mirror, the report cautions.
As a result, the key to successful navigation in 2007 will be a clear focus on capital management and underwriting discipline.
Given the increased competitive pressures, A.M. Best believes that the 2005 start-ups now will be forced to seek alternative business opportunities in an attempt to fully utilize the capital raised.
Leading the Bermuda pack for 2006 in terms of net premium written volume was Ace, followed by XL Capital, Everest Re and Partner Re.