Overall profitability deteriorated in 2022 but Bermudian and US reinsurers collectively reported improved underwriting results and a second consecutive year of top-line growth, a new report reveals.

The Best’s Market Segment Report, US-Bermuda Reinsurers’ Technical Results Improve amid Investment Losses, is part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo.

According to this report, AM Best’s composite of 21 reinsurance groups domiciled in Bermuda or the US experienced net premium growth of 16 per cent in 2022, after a 20 per cent gain in 2021.

This growth reflected an improved rate environment for most business lines, particularly property exposures.

AM Best said that it projected that premiums for the composite would further increase in 2023, as demand remained high, and rates in key lines of business continued to rise, particularly for catastrophe-exposed business.

“These favourable trends, combined with catastrophe activity that impacted primary carriers more than reinsurers during the first half of the year, suggest that the composite should be able to sustain, and even improve upon 2022 results,” said Greg Dickerson, director, AM Best.

Despite the high natural catastrophe activity, the composite’s 2022 accident year — excluding prior year reserve development, combined ratio of 94.7 was 7.5 points better than the 102.2 ratio in 2021, AM Best said.

It added that the year-over-year improvement was due largely to steady improvement in reinsurance pricing, terms, and conditions.

The report said that significant realised and unrealised investment losses led to an aggregate net loss for the US-Bermuda composite in 2022, following positive net income in 2021.

The composite posted a minus 2.4 per cent return-on-equity ratio, versus 10.8 per cent in 2021, when net income benefited from substantial pre-tax realised/unrealised investment gains.