Reinsurance industry finances have bounced back after the sector’s capital base dipped by almost one third as the Covid-19 pandemic gripped the globe in March.The recovery meant the amount of capital in the sector, a major part of Bermuda’s economic engine, was last month only 5 per cent lower than at the end of 2019.But there is uncertainty over the size of losses for the industry caused by the coronavirus crisis.A total of $7 billion in pandemic losses have been recorded so far, but estimates of losses still to come ranged from $30 billion to $130 billion.There has also been disruption in the insurance-linked securities market, where investors have preferred to place new capital with well-established reinsurers and funds.Bermuda is regarded as a market leader in ILS.The state of the global reinsurance market was examined in Willis Re’s 1st View report for the July 1 renewals.James Kent, the global chief executive officer of Willis Re, said the second quarter had seen a “remarkable recovery” in the capital base of the reinsurance market.He added that showed investors were prepared to commit more equity and debt to existing companies and start-ups.There has also been a recovery in investments as stock markets surged back during the three-month period and about $16 billion of new capital related to Covid-19 was raised.Mr Kent said civil unrest in some mature markets had raised concerns over strike, riot and common commotion exposures, with some reinsurers looking to apply the same underwriting approaches developed over the years in less well-developed markets.Insurers were able to secure sufficient reinsurance capacity at the June 1 and July 1 renewals.Mr Kent said: “Strong client-centric underwriting, which was less of a feature in the market dislocations seen in 2001 and 2005, was evident on a wide range of placements.”The ILS market has seen some disruption as investors withdrew from some funds and were more selective, putting new capital in “stronger, well-established reinsurers and funds”.Mr Kent said: “The bearish view of investors, already wary following the 2017-18 loss creep, was a result of Covid-19 being the first reinsurance loss that showed a true correlation between the asset and liability sides of reinsurers’ balance sheets.”But he added he was optimistic about the global reinsurance market.Mr Kent said: “Facing the rigours of the North Atlantic hurricane season and the development on Covid-19-related losses, the global reinsurance market finds itself better positioned to provide stable long-term support than many may have dared to hope only three months ago.”