Analysis of the financial strength of Bermudan insurers

Analysis of the Financial Condition Reports of Bermudan insurance and reinsurance firms reveals that 60% for firms reported a rise in their Economic Capital Requirement ratio (ECR ratio, also known as the solvency ratio) between 2022- 2023.

The analysis, based on close to 100 reports, is conducted using data provided by the Bermuda Insurance Database, a data platform powered by Solvency II Wire Data.

The chart below shows the distribution of ECR ratios for the period.

100 Bermuda ECR ratios 2023
SOURCE: Bermuda Insurance Database

Largest increases in ECR ratio

The three largest rises in the ECR ratio were reported by Starstone Insurance Bermuda (up from 297% to 445%; Validus Reinsurance (up from 234% to 394%); and Global Atlantic Assurance (up from 337% to 593%).

Largest drop in ECR ratio

The three Bermudan insurers in the sample with the largest reported drop in ECR were Best Doctors Insurance (down from 603% in 2022 to 147% in 2023); Transamerica Life International Bermuda (down from 1207% to 707%); and L&G Re 2 (down from 409% to 261%).

Transamerica Life International Bermuda provided further explanation for the change to the ratio in the Financial Condition Report. It reported a drop in Total eligible funds to meet the ECR from USD 1.13 billion to USD 0.8 billion in 2023.

“The various factors causing the decrease in Eligible Capital were:
• Dividends paid to shareholders in 2023,
• Strain caused by new business written.”

These were offset by a decrease in technical provisions after the company rebalanced collateral in the first quarter of 2023.

White Rock Insurance SAC, part of the Enstar group, reported an ECR ratio of 55% for both years. The company does not provide an explanation in the FCR, however, in previous years it notes that it was exempt from publishing the ECR figures.

ECR ratio distribution

The bulk of firms reported an ECR ratio between 100% to 300%.

Histogram 100 Bermuda ECR ratios
SOURCE: Bermuda Insurance Database

(74 firms in 2022 and 72 in 2023, see chart below). The ECR ratio distribution of the sample has remained relatively unchanged over the period.

The full dataset used to compile the report is available on the Bermuda Insurance Database.

Bermuda Insurance Database Main
Bermuda Insurance Database Main