Reinsurers have enough capital to handle Sandy losses: S&P
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While the extent of insured losses resulting from Superstorm Sandy remains unknown, global reinsurers likely have sufficient capital to handle the losses, according to a report released Wednesday by Standard & Poor's Corp.
“Despite continued uncertainty surrounding the final insured loss estimates for Superstorm Sandy, Standard & Poor's Ratings Services believes that the reinsurance sector's strong capital and very strong earnings thus far in 2012 will allow it to withstand losses well outside the range of current estimates,” according to the report. “We estimate that insured losses from Sandy would have to exceed $50 billion to start materially eroding the sector's capital base.”
But the rating firm said if expectations of capital regeneration are not met, ratings for some individual reinsurers could come under pressure.
Moreover, the report says that the uncertainty surrounding loss figures is not likely to abate any time soon.
“Coverage from various insurance products will raise questions about how much (re)insurers are on the hook to pay,” the report states. “The debate about wind versus flood damage that characterized the wake of Hurricane Katrina in 2005 will likely reappear following Sandy.”
