CONSOLIDATION in the Bermuda insurance market will continue in 2016, albeit at a slightly slower pace than 2015, according to a new Fitch Ratings report titled ‘Bermuda 2016 Market Update’. Fragile conditions in the global (re)insurance market characterized by falling prices and weakening terms and conditions are pressuring earnings for Bermuda (re)insurers.
“Organic growth options are limited and scale and diversification are driving a rapid pace of M&A activity for Bermuda insurers and Fitch expects industry consolidation to continue,” said Brian Schneider, Senior Director, Fitch.
Fitch maintains a stable rating outlook on both U.S. property/casualty insurance and global reinsurance, which includes Fitch’s coverage of Bermuda market (re)insurers. However, Fitch’s reinsurance sector outlook is negative as premium prices are expected to fall further in 2016 while investment yields will remain close to historic lows.
The U.S. property/casualty insurance sector outlook is stable as a shift towards sharply inadequate premium rates or profit levels approaching operating losses is not anticipated.
Despite global market challenges, the Bermuda insurance landscape remains strong in Fitch’s view as the island adapts to changing market conditions.