Bermuda’s (re)insurers face persistent challenging underwriting and investment conditions, according to ratings agency AM Best.

The industry is struggling to generate enough profit to cover the cost of capital, and return on equity and combined operating ratios have worsened since Superstorm Sandy in 2012.

“AM Best still maintains a negative outlook on the global reinsurance sector, and pressures facing the Bermuda market are no different and perhaps even magnified,” it says.

“Questions linger as to how the market will turn, with participants largely conceding that hardening across most lines of business is unlikely, and most are now hoping for at least some pockets of hardening.

“The convergence of all these factors forces companies to manage shareholder expectations while exhibiting underwriting discipline and remaining relevant to cedants.

“In the absence of some market-changing event, the Bermuda market will need to balance innovation and discipline for the foreseeable future.”