Bermuda RT 2016 2017 It's a bit of a cliché to say we're living in interesting times, but clichés become clichés because there's more than an element of truth to them. President Trump has taken residence in the White House, the UK has voted to leave the European Union and Bermuda is facing one of the most hotly contested government elections in recent years.
In the world of (re)insurance, from a high level it might seem like nothing much has changed in the past year, but look a little closer and we can see that our market has become more interesting too.
There is an increasing feeling that we are in a period of a "new normal" with low interest rates, benign cat results and reserve releases propping up balance sheets. 2016 saw a greater number of cat losses than in the previous four years, but none of them were big enough to move the needle. The totting up of frequent losses certainly affected a few reinsurers' earnings, but there's been no major impact in terms of industry capital.
And the inflow of capital we've seen since the beginning of the financial crisis shows no sign of stopping. Interest rates look to be on the increase, but it's unlikely that a 25-50 basis point movement will encourage institutional investors and hedge funds to move their money from our market any time soon. We're still an attractive sector for investors, even with returns on equity dwindling towards high single-digit figures.
(Re)insurers feel the pain from these events on both sides of their balance sheet - the investment return from their assets is struggling, which puts pressure on the underwriting side of the book.
Add to that the prospect of some real pain, as and when normal loss ratios begin to increase in combination with natural catastrophe losses, and it starts to look more than a little gloomy.
As readers will know however, gloomy isn't really in Bermudians' emotional range. Get a group of senior Bermudian executives around a table, and the conversation doesn't revolve around the malaise of our sector, but rather where we can still find growth, and how best to achieve it. New geographies, emerging perils and changing demographics are all discussed with great vigour and verve.
Similarly, in an era that has seen a large amount of M&A in our sector, an outsider might believe that the days of the independent Bermudian are numbered.
Not so, say our panel. There's still scope for those that want to differentiate themselves from their product. And even if some of the remaining carriers are swallowed up by Asian buyers, outside investors or their peers, Bermuda remains a very (re)insurance-friendly environment, meaning there will always be new start-ups.
So as we traipse through this gloomy winter period, allow a little Bermudian sunshine into your life, and be uplifted by this roundtable's optimistic outlook for the future.
To read the supplement please click here.
The Insurance Insider