Major insurers could take a significant hit as a result of Britain’s decision to pull out of the European Union, a top ratings agency warned yesterday.

AM Best said it did not expect to take rating actions in the near future as a result of the shock vote — but warned it would continue to monitor the exit process.

The AM Best report said: “The decision has led to a sharp drop in Sterling and global equity markets.

“AM Best notes that the financial market volatility could have a material impact on insurers’ half year and balance sheets, with most companies reporting their positions as at June 30.”

The report added: “Solvency II’s market-consistent approach to valuing the economic balance sheet means that financial market volatility will be closely reflected in European insurers’ reported solvency capital ratios.

“AM Best will discuss the implications of this with rated entities, but will continue to incorporate a prospective view when assessing insurers’ financial strength.”

And the report said: “The implications for the financial strength of insurers with regard to subsequent investment market volatility, currency fluctuations and increased economic uncertainly will be closely monitored.”

AM Best spoke out after the UK voted by around 52 per cent to 48 per cent to leave the EU, where it had been a member for 43 years.

David Cameron, the British Prime Minister, who had backed a remain vote, resigned yesterday in the wake of the outcome, although he will remain until his Conservative Parry elects a new leader at its conference in October.

Sterling plunged after the result was announced and European financial markets were thrown into turmoil, although it will take several years for Britain to negotiate its exit.

The AM Best report said: “Also, as the terms of the exit are negotiated, AM Best will discuss with rated companies what prospective changes will mean for their competitive positions and ability to continue to access business in the UK and EU.”

Greg Wojciechowski, chief executive officer of the Bermuda Stock Exchange and the chairman of ILS Bermuda, said the island can offer a “safe harbour” amid fears over the future after the UK narrowly voted to quit the European Union.

Mr Wojciechowski explained the British vote “in no way diminished” Bermuda’s standing as a well-respected and well-regulated financial centre.

He added: “While the world wrestles with the Brexit vote, Bermuda will continue to offer innovative commercial solutions to clients and industry segments we support and we welcome future opportunities that might arise.”

Mr Wojciechowski said: “Bermuda will continue to provide a safe harbour amid uncertainty for the foreseeable future.”

He added: “Bermuda’s unique geographic position between two of the world’s deepest capital markets and largest insurance centres has created commercial opportunity for the island as well as a solid platform to provide services to a global audience — and the Brexit result will not impact this.

“Bermuda will continue to offer innovative commercial solutions to clients and industry segments we support and we welcome future opportunities that may arise.”

The Royal Gazette’s business magazine, The Bottom Line, reported last month that Bermuda could get an influx of reinsurance business into the EU if the UK voted to leave.

And Lloyd’s of London chief risk officer Steven McGovern warned that Britain would have to seek Solvency II equivalence if it left the EU — a privilege Bermuda already has on its own merits — and also cause financial turmoil in European financial markets. Bermudians who hold UK passports are also set to lose the automatic right to live and work in Europe on equal terms with Euro nationals, although those already resident will not lose that right under treaty provisions.

Mr Wojciechowski said that the BSX would continue to work to improve the domestic capital market, including the insurance-linked securities class, where Bermuda is the global listings leader.

He added: “In the face of change, Bermuda’s ILS platform remains a stable centre of excellence for the creation and listing of these structures and as an industry, we stand ready to provide collaborative support to overseas colleagues to help drive the global ILS market.” Grainne Richmond, president of the Bermuda Insurance Management Association, said it was too early to comment on the full effects of Brexit as it will take years for Britain to untangle itself from Europe after 43 years as a member of the EU.

She added: “As an economic bloc, the European Union is stronger with the United Kingdom in it, yet respect has to be given to the decision of the British people ...

“It will likely take years for a full departure of Britain from the EU, therefore it remains premature to comment on any effects the vote will have on the captive insurance market. Bima and our members will be monitoring the process closely in the UK.”