Insurers should be able to withstand 2019 hurricane losses: Fitch
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Property/casualty insurers are well positioned to weather the landfall of a major hurricane this year despite significantly higher losses in 2017 and 2018, according to Fitch Ratings Inc.
Aggregate U.S. industry policyholders' surplus grew by 6.2% over the two-year period to $757 billion as of year-end 2018, the Chicago-based ratings agency said in a statement on Monday.
"Given insurers' substantial capital positions, it would likely take a record individual storm loss or a confluence of significant loss events, which could include catastrophes, investment losses and adverse loss reserve experience to impair insurers enough to warrant downgrades," Chris Grimes, director of insurance, said in the statement.
Although the National Oceanic and Atmospheric Administration predicts average levels of hurricane activity this season, the number of storms making landfall and their intensity are more important to insurers and coastal residents than the number of storms forecast, Fitch said.
“Determining those factors remains highly uncertain, making insurers' vigilance in managing catastrophe exposures and risk aggregations essential,” according to Fitch.
Traditional reinsurance capital is also expected to remain strong in 2019 as the sector has demonstrated resilience to the elevated catastrophe losses experienced in recent years, according to Fitch. However, the use of alternative capital has continued to grow in 2019 and the catastrophe bond market has seen large national sponsors driving catastrophe bond issuance along with smaller insurers with high-risk property exposure expanding their use of insurance-linked securities, the ratings agency said.
Disaster experts urged businesses and individuals to prepare for the upcoming hurricane season and other potentially catastrophic events.
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U.S.-based AccuWeather Inc. said that up to 14 storms are likely to form in the Atlantic Ocean this year, with about seven storms becoming hurricanes and up to four becoming major ones, The Andalusia Star-News reported. Dan Kottlowski, the Atlantic hurricane expert at AccuWeather, said that the number of tropical storms and hurricanes is expected to be lower this year compared with the number of Atlantic storms in 2018.
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