Credit Suisse ILS’ Bernina Re delivers profit, commutes $2.5bn of pre-2020 risk

Bernina Re Ltd., the Bermuda based reinsurance underwriting and transformer vehicle backed by capital from funds managed by Credit Suisse Insurance Linked Strategies Ltd., has delivered an underwriting profit of $8.9 million for 2022 at a 75.4% combined ratio.

The combined ratio was elevated by a commutation of underwriting reserves amounting to $2.5 billion from the 2019 and prior underwriting years.

The one-off cost for commuting a significant portion of those pre-2020 risks is included in the underwriting result and without that additional cost Bernina Re reported that its underwriting combined ratio for 2022 would have been 49.3%.

The underwriting profit for 2022 comes despite the effects of hurricane Ian losses.

Importantly, Bernina Re also reported that its loss estimates for hurricane Ian have remained stable compared to initial estimates made in the third-quarter of 2022.

Michael Dennis, Chief Executive Officer, commented, “Bernina Re’s property catastrophe-driven reinsurance and retro book has shown great resilience in 2022, the fifth costliest year on record for insurers, with the second costliest insured loss event on record globally.

“We have delivered a pleasing overall underwriting profit, including a profit contribution from our 2022 underwriting year, despite the significant industry loss caused by Hurricane Ian in September 2022. A more favourable interest rate environment for our conservative investment portfolio has further contributed to the positive net result for the Company.

“Bernina Re has been well placed to take advantage of strong market conditions during the January 2023 renewal period and beyond.

“Together with the persisting interest rate environment, these dynamics have contributed to a positive financial performance in 2023 to date.”

Commuting the reserves from years 2019 and earlier helps to remove legacy exposure to underwriting years, providing a cleaner platform and portfolio to go-forward with for Bernina Re.

Bernina Re was launched in 2018 as a Class 3A reinsurer that is Solvency II compliant, becoming the flagship reinsurance underwriting platform for the Credit Suisse ILS offering and a significant amount of the business written for those ILS funds is transacted using the reinsurer.