Hurricanes Harvey, Irma and Maria (HIM) wreaked a path of destruction and devastation across the Caribbean and the US for residents and businesses alike and the fallout was also felt by (re)insurers covering those regions and third quarter results showed significant losses of more than $100m reported for personal and commercial line carriers.
However, for the most part, many property/casualty (re)insurers have been resilient so far and have avoided losses becoming a capital event according to ratings agency A.M. Best. But it remains anyone’s guess as to the longer term effects on the industry and whether these storms are a sign of things to come.
A.M. Best measured the impact of the hurricanes based on reports published by publicly held companies and lists the property and casualty (re)insurers with reported net losses over $100m from HIM. Below are the top 10.
Lloyd's of London
3,600 (Pre-tax, Includes Mexican earthquakes)
3,000 (Includes Mexican earthquakes)
American International Group
1,050 (Includes Hannover Re, includes Mexican earthquakes)
What happens post storms?
The Best Special Report suggests that among the alternatives for (re)insurers are: a likelihood to shrink their capacity or increase pricing in the Caribbean and Florida or expand their use of reinsurance or retrocessional protection, leaning heavily on capital markets. However, there may be limited capacity to raise rates as the marketplace is fiercely competitive.
Primary insurers, traditional reinsurance, collateralised reinsurance, and insurance-linked securities (ILS) will all share in the hurricane-related losses. A.M Best says that although the catastrophes “had a profound impact on earnings, they are unlikely to constitute a capital event for the majority of reinsurers, based on current reported losses.”