Bermuda is home base for 14 of the world’s top 50 reinsurers, a new list published yesterday by global rating agency AM Best reveals.

The list which reflects the latest available 2020 compilation, confirms the continued concentration of reinsurance expertise found within the island’s 21 square miles.

It is found in Best’s Market Segment Report, as part of Global Reinsurance Markets, entitled Global Reinsurance Outlook Remains Stable in a More Uncertain World.

The rating agency’s list is a refined version from previous years, with a methodology aimed at more precisely reflecting market dynamics.

For the first time, it includes only year-end gross reinsurance premiums written, eliminating primary premiums even for companies that had not attained Best’s former 25 per cent threshold.

Bumped out of the top ten from the 2019 list is PartnerRe, the second highest ranked Bermuda company at number 12. Just ahead of it at #11 is the Everest Re Group.

New entrants to the list this year include Bermuda-based specialty writers Fidelis and Lancashire, which led to the Best comment: “The specialty market has seen some of the highest rate increases in this hardening environment, and both of these companies have diversified business platforms through which to access these increases.”

The largest fall came from Hiscox, down from number 40 to 47, reflecting capital Hiscox redirected towards its primary business, because of the rate hardening seen on the direct side.

Bermuda companies included five in the top 20: (in order of appearance) Everest Re Group Ltd., PartnerRe Ltd, RenaissanceRe Holdings Ltd., AXA XL and Arch Capital; together with #22 Sompo International #24 Axis Capital Holdings and #25 Validus Reinsurance Limited.

Rounding out the Bermuda 14 are SiriusPoint Ltd., Aspen Insurance, Allied World Assurance Company Holdings, Fidelis, Lancashire, Hiscox and Qatar Reinsurance Company Limited.

The overall list is topped as usual by Munich Re and Swiss Re.

A.M. Best said: “Pure reinsurers have become a rarity in recent years, with many traditional reinsurers seeking the diversification and portfolio optimisation that can accompany branching into the primary space.”

Because of the methodology change, the company said: “Munich Re, which last topped the list in 2017, has surpassed Swiss Re, which occupied the top position in 2018 and 2019. Had we adopted this methodological change in last year’s ranking, Munich Re would have been first there as well.”

Total gross premiums written among the top 50 in 2020 rose to $321 billion, representing a substantial increase in written premiums, that Best partially attributes to rate increases derived from the hardening reinsurance market, a trend that AM Best expects will continue into 2022.

Best further stated: “The static nature of the top 10’s market shares reflects their dominant relationships with brokers and cedents, along with their pricing power and their more insulated positions from competition.

“However, for cedents, this concentration means that diversifying their reinsurance panels and ameliorating counterparty risk remains a challenge.”

Best concedes their annual ranking has continued to evolve, with an intention to isolate a reinsurer’s business profile using gross written premiums as the metric.

Seeking to obtain the most accurate figures possible, a number of assumptions and adjustments are made as they consider financial statements, accounting standards, and segment reporting.

Best explains: “Capturing only third party business and excluding affiliated or intergroup reinsurance are perhaps the most essential adjustments.

“In previous reports, AM Best had included primary premiums in the calculation of gross premiums written, if the percentage was below what AM Best deemed a material threshold (25 per cent).

“AM Best has revised its methodology to exclude all non-reinsurance premium, leading to a change in the ranking of the top two reinsurers this year.

“Finally, in cases when financial statements and supplements do not provide a proper breakdown of reinsurance premiums, AM Best obtains data through direct dialogue with the reinsurer.”