Most Bermuda-based reinsurers could recoup last year’s punishing investment losses in the next one to two years providing catastrophe losses stay in check, according to a Deloitte survey.

Hurricane Ike, on the heels of Hurricane Gustav, provided one of the costliest cat events on record for Bermuda, but this paled beside the $US13 billion ($16.2 billion) in asset writedowns due to the global financial crisis. The combined effect was a 15% erosion of capital reserves from the 2007 level.

“At least over the near term, however, the greatest risk to global (re)insurers and Bermuda writers alike would be that of a very large – $US40 billion ($50 billion) or larger –  catastrophe event, which would likely force some writers back to the capital markets to reload,” the report says.
 
“Given the current financial turmoil, it is not certain that all would be successful in raising additional funds.”

Included among the regulatory developments slowly changing the landscape are Solvency II, proposed new collateral requirements from US regulators, increased oversight by the Bermudian Government and a mooted crackdown by the Obama administration on US-sourced business going to Bermuda and other low-tax domiciles.