Bermuda re/insurers post 85.3% combined ratio as catastrophe losses ease

Fitch Ratings follows seven Bermuda re/insurers. Its review, carried by Reinsurance News, puts their collective first-half 2026 combined ratio at 85.3%. That compares with the 90.0% they posted for all of 2025. California wildfires alone added 6.7 points to that year's ratio. This year, catastrophe losses have contributed only 2.8 points, including claims from the Iran conflict. Fitch estimates total industry insured losses from those events at roughly $3 billion.

Every company in the group wrote an underwriting profit. The quality of that beat, though, deserves a closer look. Strip out catastrophe losses and the accident-year combined ratio sits at 85.5%, exactly what it was for full-year 2025. Bermuda's underwriting book did not change in any material way. What changed was the volatility around it. This is a weather story, not an underwriting transformation.

Returns remain strong by any standard. Net income return on equity hit 15.7% in the half. That is down from 18.6% in 2025 but still a level most of the industry cannot reach. Reserve releases added 3.0 percentage points to the combined ratio. That was up from 2.2 points a year earlier. The releases were concentrated in property and specialty lines. Hamilton Insurance Group was the outlier, booking 1.4 points of adverse development. Fitch noted Hamilton and several other companies recognized further losses tied to the Baltimore Bridge collapse.

The timing makes these numbers awkward. Fitch describes the global reinsurance market as difficult, with ample capacity and competition shaving prices across many lines and tilting terms toward buyers. The same pressures are visible elsewhere. AM Best counts a record $705 billion in reinsurance capital. The largest European reinsurers, even while reporting record returns, are cutting nat-cat prices by as much as 25% at mid-year renewals. The mechanism is uncomfortable but direct: strong profits are financing the price concessions required to keep capital deployed. Fitch expects the U.S. property and casualty market to stay broadly stable this year, with slightly lower underwriting profits and net earnings. That forecast assumes no outsized catastrophe activity.

Bermuda is where this dynamic is most visible. The island carries the balance sheets Fitch covers and, alongside them, the collateralized reinsurance, sidecars, and transformer vehicles through which institutional capital reaches the risk. Nascent Re, for instance, issued $23.5 million in preferred shares earlier this year. In a softening market, third-party capital can accept thinner returns or stand aside. Since Fitch expects reinsurers to keep generating favorable returns through 2026, waiting out the cycle will not be quick.

For ILS investors, the reserve line is the one to watch. The 3.0-point benefit from reserve releases is a finite cushion, not a recurring flow. The underlying accident-year ratio of 85.5% is the honest measure of price adequacy, and the market is already eroding it. Fitch's forecast of slightly lower underwriting profits for U.S. property and casualty insurers in 2026 is a milder version of the same warning. When the next major windstorm hits, the question will be whether current prices were adequate on the way in — and the first half of 2026 says only that the losses stayed away, not that the prices were right.