Strong catastrophe reinsurance results are leading to growth in Bermuda’s market, but competition may increase as new capital enters the sector, according to the latest Lloyd’s of London annual report.

The global insurance marketplace reported major losses of £2.4 billion (about $3.2 billion) in 2025, well below long-term averages, in a relatively mild year for catastrophe claims. The property segment delivered a combined ratio of 75.4 per cent thanks to strong underwriting performance.

“Strong underwriting performance, disciplined growth and resilient investment returns underpinned the Lloyd’s market’s result in 2025,” said Patrick Tiernan, chief executive of Lloyd’s.

“Supported by a very strong balance sheet, these results provide a firm foundation for the challenges and risks ahead, enabling the market to support communities, businesses and economies through periods of uncertainty.

“While the financial cost of catastrophes in 2025 was relatively modest, we remain acutely aware of the greater, human impact and those whose lives have been affected.”

However, Lloyd’s cautioned that the reinsurance market is expected to become more competitive in 2026 “absent any significant catastrophe activity”. Potential pressure on pricing could result as capital returns to the sector. Recent reports have speculated on potential mergers in the sector.

The warning echoes concerns among Bermuda reinsurers that the current pricing environment may not last if capacity grows. Lloyd’s added that “given the volatile nature of the class, re/insurers will maintain a clear focus on catastrophe pricing”.

At the same time, geopolitical instability is creating new opportunities. Demand for political risk, credit and war-related insurance has increased, driven by conflicts including the Russia-Ukraine war and tensions in the Middle East. The report noted that “macroeconomic and geopolitical uncertainty… have also increased demand for coverage”.

Despite the strong results, the report named several risks, including rising capital requirements and pressure on casualty reserves.