The Bermuda insurance market has recorded catastrophe losses of more than $6 billion in the first three months of the year.The enormous sum, which will help stricken communities recover from natural disasters on the other side of the world, makes it the most expensive first quarter on record for the Island's biggest industry.Information sourced from first-quarter results and loss estimates by 20 of the Island insurance market's major players, collated by The Royal Gazette, shows the group clocked up between $6.18 billion and $6.38 billion of catastrophe losses in the first three months of the year.Approximately half of those losses were related to the March 11 earthquake and tsunami which caused horrific destruction in north-eastern Japan, razed entire towns to the ground and left around 28,000 people dead or missing.Even before the Japan disaster, the Island's reinsurers had already been on the hook for billions. Widespread flooding in Australia, inundating an area greater than the whole of Western Europe, followed by an earthquake in New Zealand that caused terrible damage in the city of Christchurch and left more than 150 people dead, sparked a wave of claims.Some insurers saw additional losses in their political risk business related to uprisings in the Middle East, particularly the repeated demonstrations in the Egyptian capital, Cairo. A further notable loss was the storm-related damage to the Gryphon offshore energy platform in the North Sea, estimated to have cost around $800 million.PartnerRe, one of the world's top five reinsurers, was the only Bermuda player to lose a ten-figure sum as a result of catastrophes, as it suffered a $1.07 billion hit.Three others were faced with payout exceeding half a billion dollars Axis Capital ($577 million), RenaissanceRe ($565.2 million) and Everest Re ($530.9 million).It all added up to a stern test of the underwriting skills of the Island's re/insurers, particularly as record low interests have limited returns from the companies' huge investment portfolios. It was little surprise that only five of the 18 companies in the group to have published first-quarter net income figures managed to make a profit. The 18 made a combined net loss of more than $2.63 billion.According to Yvette Essen, an analyst with AM Best, the early losses mean many reinsurers will find it difficult to achieve a full-year underwriting profit for 2011.“The industry faces further challenges in achieving profitability as the hurricane season approaches and investment yields remain low,” Ms Essen wrote in a May 13 briefing on the global reinsurance industry.The first-quarter events would potentially produce losses of $50 billion to the global insurance industry, she added, and “while reinsurers continue to maintain sound capital positions, the excess capacity that existed at the prior year-end has clearly been diminished”.On the brighter side for the industry, this year's wiping out of billions in industry capital is increasing the likelihood of a long-awaited increase in insurance rates, especially in the property and catastrophe lines in which the Bermuda market specialises.Ms Essen said there was evidence that the market was “beginning to harden for certain risks”. As a result, some companies were preserving capital to be able to sell more reinsurance when rates climb.“While they are continuing to pay shareholder dividends, extraordinary dividends and share buybacks appear to have halted,” she said.Last year Bermuda companies spent more than half of their profits on buying back their own shares. As most firms' shares were trading on the stock market at a discount to their accounting value, company boards saw this as a good way to utilise excess capital. But now they are preserving capital to take advantage of a better re/insurance market.Some have gone to the markets to seek more capital. These include Montpelier Re, which issued $150 million of shares this month and Alterra Capital, which formed New Point IV, a “sidecar” which will boost capacity to enable the company to sell more insurance.AM Best does not expect an influx of new companies this year, as happened in Bermuda after the 9/11 attacks in 2001 and Hurricane Katrina in 2005. Instead they expect the new capital to come in the form of “sidecars”, as they enable investors to make short-term commitments, rather than the longer duration required by new companies.BERMUDA INSURANCE MARKETFirst quarterCatastrophe Net incomecosts /loss($m) ($m)Ace 443 259Alterra 115.3 -46.7Arch 178.7 19.3Argo 113.1 -92Ariel 35-50 24.9Aspen 255.9 -151.7AWAC 132.2 8.6Axis 577 -384Catlin 375 -Endurance 185 -87.4Everest 530.9 -315.9Flagstone 200-300 -161.2Hiscox 181-271 -Lancashire 116.5 8.6Montpelier 200 -104.3PartnerRe 1070 -807Platinum 248.1 -157.2RenRe 565.2 -248Validus 271.1 -172.4XL 387.4 -227.3Totals 6,180.4 - 6,385.4 -2,634.7Sources: Company press releases