Successive waves of reinsurer formation in Bermuda, each raising billions in fresh capital in the months following a major catastrophe.
The Bermuda reinsurance market was built in distinct waves, each named 'Class of' followed by its formation year, and each born in the months following a major shock that had drained existing players' capital. The Class of 1985 followed a US liability capacity crunch; the Class of 1993 followed Hurricane Andrew in 1992, whose roughly $15.5 billion in insured losses drove about a dozen US insurers into insolvency; the Class of 2001 followed the September 11 attacks, with entities such as Axis Capital and Endurance Specialty; the Class of 2005 followed the Katrina, Rita and Wilma hurricane season, with Validus, Lancashire and Ariel Re raising several billion dollars of fresh capital within months; and a more modest wave formed in 2020, after the Covid-19 pandemic. This cycle illustrates how fast global capital flows into a jurisdiction offering favorable taxation, tailored regulation and proximity to London and New York brokers, as soon as a catastrophe creates a hardened-pricing pocket attractive enough to justify it.
After Hurricane Andrew in 1992 and its $15.5 billion in insured losses, about a dozen US insurers fail; in the following months, the Class of 1993 forms in Bermuda to capture the resulting hardened premiums.
Class of 1993, Class of 2001, Class of 2005, Class of 2020, vague de capital bermudienne