Bermuda-based insurers and reinsurers are struggling in an industry downturn, with deteriorating fundamentals and the trough of the cycle not yet reached, rating agency A.M. Best said in a new report.

The largest players in the market include ACE Ltd, XL, PartnerRe and Everest. They collectively make up just more than half the Bermudian market by net premiums earned in property and casualty insurance, which is the primary focus of companies in the region.

For the first nine months of this year, net premiums written and net earned premiums have fallen, investment income is down, loss and expense ratios are up and return on equity is off sharply for for the 18 publicly traded companies in the market the agency rates.

What financial strength there is, the agency said, is coming in large part from releases of loss reserves, which are boosting returns and keeping expenses under check.

“A.M. Best continues to see more challenges than opportunities as pricing pressures persist, investment portfolios lack sufficient yield, and loss-reserve releases - which are masking the symptoms - are likely drying up,” the firm said in the report.

The report is due to be released in full next week, but our Business desk has obtained a copy - see their report tomorrow