A.M. Best’s composite of US and Bermudian reinsurers posted an improved underwriting margin in 2021, despite elevated catastrophe activity, the rating agency reported.

The group of reinsurers experienced a minimal number of COVID-19-related claims and experienced a larger contribution from investment results, Best said.

According to a Best’s Market Segment Report, “US-Bermudian Reinsurers Benefit as Market Conditions Improve,” the group of reinsurers posted a combined ratio of 95.8 percent in 2021, a 6-percentage-point improvement over 2020’s result.

The group is expected to continue to experience favorable reserve development as COVID-19 claims development has been less than expected, Best said. In addition, a significant amount of the reinsurers’ COVID-19 claims reserves is still incurred but not reported (IBNR), according to the rating agency, so if current frequency and severity trends for recent accident years continue, the reinsurers should see further favorable reserve developments. Inflation fears might affect various reserve assumptions, however, Best noted.