Re/insurance & ILS a “bright light” in Bermuda’s economy: Wightman, PwC

The insurance, reinsurance and insurance-linked securities (ILS) sector has been a “bright light” in Bermuda’s economy, even through the challenging economic environment of the pandemic, according to Arthur Wightman, Territory leader, PwC Bermuda.

Discussing the findings of PwC’s latest Global CEO Survey, Wightman noted the importance of the re/insurance and ILS sector to Bermuda and the fact it has been a resilient contributor to the country, as well as having positive prospects ahead due to market hardening.

PwC’s latest survey found that CEO’s are a little more optimistic about the economy now than a year ago, with 77%, predicting the global economy will improve in 2022, while only 15% expect worsening conditions.

Reflecting the stage of the pandemic the world is at, confidence has significantly improved since 2020, when 53% of CEO’s surveyed by PwC actually said the economic conditions would get worse.

Perhaps notably, CEO optimism about the global economy declined most in the US, down 18 points to 70%, and was also down in Brazil (dropping seven points to 77%), China (down nine points to 62%) and Germany (down four points to 76%), which PwC suggests could be because inflation and supply chain constraints have become more of an issue.

Conversely, optimism appears highest in India, with 94% of CEOs anticipating global growth in the coming year, up from 88% in 2021. Optimism is also rising among CEOs in Japan (plus 16 points to 83%, from 67% last year), and is modestly higher in the UK (up five points to 82%), PwC said.

Arthur Wightman commented, “The chief executives who responded to our 25th Annual Global CEO Survey display optimism about continued economic resilience, but they are also well aware of potential threats that could impact their organisations over the coming 12 months, including macroeconomic volatility, cyber and health risks. CEOs in financial services, in particular, are concerned about cyber threats.

“While threats such as climate change and social inequality are further down the list, it is critical not to lose focus on these more long-term issues as they will define what sort of world we live in and hand down to the next generation. Environmental, financial and societal pressures are converging and today’s leaders must solve a new equation.”

Interestingly, re/insurers are one of the most confident industry groups of CEO’s, according to PwC’s survey, with 63% highly confident about growth prospects for their companies.

“Optimism in the insurance industry reflects better expected financial performance from continued rate hardening and global economic recovery,” Wightman explained.

Adding that, “The insurance and reinsurance sector’s resilience has been a bright light in Bermuda’s economy.

“The continuing hard market and investor appetite for reinsurance is supporting further capital inflows in 2022. The life reinsurance, captives, ILS and legacy sectors are all showing buoyancy.”

However, Wightman also noted that Bermuda “needs more economic diversification to better weather such shocks in the future”, referring to the pandemic and how it has impacted the countries tourism sector.

Bob Moritz, Global Chairman, PwC commented on the survey results, “While the ongoing pandemic and emergence of new variants cast a shadow over the year, the high level of CEO optimism we found speaks to the strength and resilience of the global economy and the ability of CEOs to manage through uncertainty. There is nothing “normal” about the world we are working in, but we are getting used to it. We are seeing differences in confidence among countries, and there is no shortage of challenges to navigate, but it is encouraging that CEOs we spoke with on the whole feel positive about 2022.

“Through 25 years of the Global CEO Survey, we’ve seen CEOs tackle challenges from the bursting of the dot-com bubble to the global financial crisis. Today, new challenges with the global pandemic and climate change are testing CEOs like never before. Yet, no matter the issue or year, one constant we see is the fundamental importance of establishing trust. This year, trust appears linked to everything from CEOs’ confidence in growing revenues to whether their organisation has made a net-zero commitment. Looking ahead, while there will certainly be unpredictable circumstances and challenges over the next 25 years, we believe companies built on a strong foundation of trust will be fortified and their CEOs best positioned to deliver sustained outcomes that contribute to long-term success.”

As we explained earlier this week, the Bermuda Stock Exchange (BSX) has reported record ILS and catastrophe bond listings on the exchange at the end of 2021, a clear example of the “bright light” of ILS bringing business opportunities to the island.