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Bermuda market to see 2017 underwriting losses: Fitch

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Bermuda market to see 2017 underwriting losses: Fitch

Bermuda's major insurers and reinsurers will see underwriting losses as alternative capital continues to enter the sector after major 2017 catastrophe losses, according to Fitch Ratings Inc.

The Bermuda market will see a 2017 combined ratio averaging around 108%-109%, including more than 20 percentage points from catastrophe losses, according to a new Bermuda 2018 Market Update released Tuesday by the New York-based ratings agency.

The 2017 figure may be higher than the 107.1% combined ratio posted in 2011, the last year with significant insured losses from catastrophes, according to Fitch.

In 2016 the combined ratio was much lower at 91.8% with only 5.3 percentage points in catastrophe losses.

The news was more positive with pricing.

Market data, Fitch said, “indicates that the soft market appears to have finally reached a bottom, with rate increases seen in most lines, particularly property and catastrophe business, albeit not as much as anticipated.”

Alternative capital, however, will continue to pose a challenge.

“The Insurance Linked Securities (ILS) market reached record levels in 2017, with growth in both catastrophe bonds and collateralized reinsurance. This continued capacity served to dampen price increases in the traditional reinsurance market following the record third-quarter 2017 catastrophe losses,” Fitch said in the report.

 

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