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Bermuda Provides Pivotal Reinsurance Capacity to the United States

Bermuda-US Puzzle-SF
November 29, 2017

Over the past 20 years, Bermuda reinsurers have paid out $208.7 billion to US policyholders and cedents for large catastrophes, related property insurance, and general liability losses, according to commercial market claims data collected by the Bermuda Monetary Authority (BMA).

  • From 1997 to 2006, claims payments to US policyholders and cedents totaled $56.0 billion.
  • Between 2007 and 2016, this increased significantly to $152.7 billion.

More recently, the devastating 2017 Hurricanes Harvey, Irma, and Maria (HIM) led to recorded estimated losses of $31.2 billion net of reinsurance costs for Bermuda reinsurers. Of this amount, the United States and Puerto Rico accounted for $30.6 billion net.

Based on publicly available catastrophe loss estimates, Bermuda reinsurers will be picking up 30 percent of the Harvey, Irma, and Maria losses from this record-setting hurricane season. This information comes from the BMA's first US Data Claims Survey, completed earlier this month. The loss information includes both direct insurance and reinsurance. A total of 250 companies responded to the survey, including commercial insurers, reinsurers, alternative capital entities, and insurance-linked securities funds.

Craig Swan, BMA's managing director, supervision (insurance), said, "The $30 billion or 30 percent of US losses paid by Bermuda re/insurers demonstrates the key role Bermuda plays in the supply of risk capacity to that country. In fact, the survey results show the significance of the Bermuda re/insurance market's contribution to the US over the past 2 decades. US insurers cede risk to Bermuda, diversifying that risk globally, making the cost of buying insurance—particularly property/catastrophe insurance—more affordable to customers living in US danger zones."

According to Standard & Poor's Global Reinsurance Highlights 2017, 13 of the top 40 global reinsurance groups ranked by net premiums written are domiciled in Bermuda and regulated by the BMA.

Total US Claims Paid Aggregate 2007–2016  Aggregate 1997–2006  Totals
 US $ ('000s)  $152,702,373  $55,989,351  $208,691,724
HIM Estimated Losses US $ ('000s)     Net Totals
United States and Puerto Rico      $30,624,382
Other      $594,675
Totals      $31,219, 058

 

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