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Lloyd’s, big reinsurers hit hardest by 2017 hurricanes: Best

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Lloyd’s of London, Swiss Re Ltd. and Munich Reinsurance Co. face the largest losses from the third-quarter 2017 catastrophes, according to a report released Thursday by A.M. Best Co. Inc.

At $4.8 billion, Lloyd’s topped Oldwick, New Jersey-based Best’s list of the insurers and reinsurers facing large losses in the quarter, which was marked by hurricanes Harvey, Irma and Maria (see chart, above, or download larger version).

Lloyd’s, which is composed of multiple syndicates, is collectively the fifth-largest reinsurer in the world, while Swiss Re is the largest and Munich Re is the second largest.

“As suspected, at the top are the largest reinsurance and retro players, but as we move down the list it becomes clear that many suffered substantial losses, including some of the largest U.S. personal and commercial lines carriers, as well as many Bermuda reinsurers,” the report said.

The list does not include mutual and privately held insurers and reinsurers, but “based on market share information, we can assume that these companies also incurred significant losses from the hurricanes,” the report said.

In Texas, the largest commercial property insurer is CNA Financial Corp. with $524 million in direct premium written, followed by Liberty Mutual Insurance Holding Co. Inc. with $423 million, and Chubb Ltd. with $364 million.

In Florida, the largest commercial property insurer is Citizens Property Insurance Corp. with $545 million in direct premium written, followed by Assurant Inc. with $482 million and American International Group Inc. with $407 million.

Market share information for Puerto Rico is not broken by line and includes auto physical damage, homeowners and farmowners insurance, fire and allied lines, inland marine and commercial multiperil. Cooperativa Seguros Group has the biggest share with $517 million in direct premium written, followed by Universal Insurance Group of Puerto Rico with $511 million and MAPFRE North America Group with $457 million.

The total industry losses for the three hurricanes is likely “upwards of $90 billion,” the report said.

“Primary insurers, traditional reinsurance, collateralized reinsurance, and insurance-linked securities will all share the losses of these events,” Best said.

Despite the catastrophe losses, “Investors are still viewing ILS as worthwhile investments…(and) seem eager to invest in cat bonds, even after experiencing some losses, which is not the news that reinsurers had hoped to hear,” Best said.

Bonds with annual aggregate protection that cover all U.S.-named storms and industry loss warranties are the most likely to have been triggered, the report said.