Bermuda reinsurers, which saw record profits in 2006, continued the trend during the first quarter of 2007, according to the latest Benfield Bermuda Quarterly report published today.
Benfield also found that despite a generally softening market, underwriting discipline and increased client retentions slowed top-line growth. At $17.3 billion, total premium written was 1 percent lower than for the same period in 2006. This is despite efforts by some companies to write more first-quarter premium in expectation of weaker June 1 and July 1 renewals.
Light losses and reserve releases helped Bermuda's 16 leading reinsurers produce $3.1 billion in aggregate net income and raise the island's capital base to $66.6 billion, Benfield said.
"The general consensus described a drifting market with rates falling between 5 percent and 15 percent overall," said Leon Janeke, from Benfield's Industry Analysis and Research team. "Despite the softening environment, many attractive opportunities remain for writing technically profitable business, and Bermuda's reinsurers appear confident ahead of the 2007 hurricane season."
According to the 17-page report, legislative changes in Florida appeared to be less of an issue than initially feared. The market was generally described as "drifting downwards following the lack of any significant losses to provide a floor support to rate levels."
Most players viewed the market environment as "one in which attractive opportunities to write technically profitable business were still available, albeit less so than in 2006," according to the report.
In addition, the report found that despite a softening in pricing, Bermuda appears well positioned to face "the rigors of the forthcoming season. The market appeared to give a cautiously optimistic diagnosis for the remainder of the year in the absence of a scramble for capital or capacity which were features of [first quarter] 2005 and [first quarter] 2006, respectively."
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