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Losses from Hurricane Florence should be “manageable” for the property/casualty insurance sector, according to an analysis released Thursday by S&P Global Ratings.
In “Hurricane Florence Will Jolt Reinsurers, but Losses Likely Will Be Manageable,” S&P Global Ratings said that although no initial estimates of losses for Hurricane Florence are available, reconstructed loss estimates based on present-day risk exposure for Category 3-4 hurricanes that have hit the region in the past vary between $8 billion to $20 billion, according to Risk Management Solutions Inc. Although, Florence had packed winds of up to 150 mph days earlier, it was a Category 1 hurricane with sustained winds of about 90 mph when it made landfall Friday morning.
Wind-related damage and the associated storm surge are likely to be major causes of insured losses, according to the report. “A majority of the insured losses will likely end up with the insurance sector rather than reinsurance, given the amount of losses and prominence of national insurers in North and South Carolina and in Georgia that generally tend to retain a higher level of catastrophe losses,” S&P said in a statement accompanying the report.
“For losses in the range of $8 billion-$20 billion, we believe Florence will be an earnings event and not a capital event, as the combined earnings for U.S. insurance and the global reinsurance sectors will be sufficient to absorb the total year-to-date natural catastrophe losses,” S&P said.
Hurricane Florence could generate tens of billions of dollars in insured losses for the property/casualty sector as it heads toward the United States, but the industry should be able to withstand any losses, according to analyses by ratings agencies.