Irene losses less than feared, manageable for insurers: Fitch
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U.S. property/casualty insurers and reinsurers are likely to suffer “manageable” losses in the wake of Hurricane Irene, Fitch Ratings Ltd. said Wednesday.
The New York-based rating agency said it does not anticipate any significant rating changes for insurers tied solely to losses from the storm.
“While Irene inflicted serious economic damage, devastation from the storm was less than initially feared,” Fitch said in a statement.
Citing AIR Worldwide Corp.'s estimate that insured losses would range from $3 billion to $6 billion, Fitch said that would put losses from Irene on par with Hurricane Rita in 2005 and Hurricane Hugo in 1989, Fitch said.
Even so, that would “pale” in comparison with Hurricane Ike in 2008, the last hurricane to make landfall in the United States, Fitch said. Insured losses from Hurricane Ike amounted to $12.7 billion, adjusted for inflation as of 2010, according to the Insurance Information Institute.
Primary insurers look to bear most of the losses, Fitch analyst Brian Schneider said in the statement. But as the incurred losses rise for insurers, chances of those losses being allocated to the reinsurance industry will increase, he said.
Fitch projected that this year will be the highest catastrophe loss year for U.S. reinsurers since 2008, when hurricanes Ike and Gustav hit. Sizable losses from additional events during the rest of the Atlantic hurricane season may lead to greater ratings vulnerability for them.
“Potential rating actions for (re)insurers would depend on the size of the loss relative to capital, options pursued to replenish capital and underwriting prospects going forward,” Mr. Schneider said in the statement.
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