Bermuda reinsurers saw their profits fall by nearly a third in the first half of this year, as pricing remained weak.

Net income for the 18 reinsurers surveyed by Benfield Group plc. dropped 32 percent to $4.3 billion during the first six months of 2008, with only four of the companies reporting a rise in profits, the Benfield Bermuda Quarterly report revealed.

Meanwhile, gross premiums written by the reinsurance companies during the first half of the year totalled $33.5 billion, unchanged from the same period a year ago. This year's figure was boosted by premiums written by acquired companies.

When acquisitions are excluded, the companies' gross writings were down seven percent for the first six months of 2008.

The Benfield report says an abundance of capacity, manageable catastrophe losses and higher primary retentions contributed to a weak pricing environment in Bermuda's reinsurance community during the first six months.

The analysis also highlighted a significant decline in investment income of around seven percent in the first half of this year to $4.1 billion, driven by cuts in US interest rates. In addition the first half of 2007 $400 million realised investment gain swung into a $1.3 billion loss.

Angela Coad, a member of Benfield Research said: "Competitive pricing and lower investment returns have put pressure on earnings, and with balance sheets fortified for potential losses, a fall in return on equity was inevitable.

"Average return on equity for the Bermuda Quarterly group, at 11.9 percent, was well below the 19.4 percent of the comparative period, and the 16.1 percent recorded at year end."