Irene losses manageable for U.S. property insurers: A.M. Best
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OLDWICK, N.J.—The financial impact of Hurricane Irene, which hit the eastern United States during the weekend, generally will be manageable for the U.S. property/casualty insurers, rating agency A.M. Best Co. Inc. said Wednesday in an analysis.
Oldwick, N.J.-based Best said that while the full financial impact of the hurricane will not be known for some time, the loss to the property/casualty and reinsurance sectors likely will be “manageable” given their current overall financial strength.
Still, the losses add to record levels of catastrophe losses that already occurred during the first half of this year, Best said.
Best estimated that the U.S. property/casualty industry had about $27 billion in first-half catastrophe losses before taxes and net of reinsurance and reinstatement premiums.
While Irene is not expected to test the solvency of U.S. property/casualty insurers, it may test the U.S. property/casualty and global reinsurance industries should there be more hurricane losses this year.
Best said its rating analysis already factors in the potential for catastrophic events, so it does not expect widespread rating downgrades as a result of Hurricane Irene.
Like Hurricane Katrina in 2005, Best said there was significant storm surge and flooding due to Irene that could prompt policy language disputes about the origin of water damage. The rating agency said that while contractual language has been clarified in many cases since Hurricane Katrina, disputes are possible since standard property policies do not cover flood damage.
The report is available at www3.ambest.com.
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