Bermuda will retain its leading position among global insurance markets despite regulatory pushes from Europe, rising catastrophe losses and a soft underwriting cycle, according to AM Best.

The ratings agency reports that the Bermuda insurance market remains well-capitalised despite a horrific 2011, and could even record a small bottom-line profit for the full year.

Bermudian companies hold roughly a third of the world’s total insurance and reinsurance capital, or some $US90 billion ($84.8 billion) in shareholder equity, thanks to its low-touch regulations and tax-free status.

AM Best says while Bermudian insurers and reinsurers are affected by the new European Solvency II capital requirements, they are in the same boat as other global insurers.

“Solvency II is big,” its report said. “It’s very important. Bermuda regulators are aware of this. They are actively working toward gaining equivalency.”

Bermudian companies are well prepared for future natural disasters, AM Best said, with most players “well in excess” of stress test requirements.

AM Best also found that while catastrophe pricing for Bermudian companies improved in some loss-hit regions, some insurers have simply left higher-risk markets rather than push for greater market share.