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Insurers with Hurricane Lane exposures include AIG, Allianz

Posted On: Aug. 23, 2018 1:09 PM CST

Insurers with Hurricane Lane exposures include AIG, Allianz

American International Group Inc. and Allianz S.E. are among the insurers with the largest exposures to Hurricane Lane, a Category 4 hurricane approaching the state of Hawaii, Fitch Ratings Inc. said in a Thursday note.

The companies with the largest commercial lines market share in Hawaii include First Insurance Co. of Hawaii, AIG, Allianz Global Risks U.S. Insurance Co., DB Insurance Co. Ltd. and Liberty Mutual Insurance Co., when combining the statutory direct written premiums for inland marine, commercial multiperil (nonliability), fire and allied lines, according to Fitch.

The storm, packing sustained winds of 130 mph, could cause “considerable” insured losses in Hawaii if it shifts northeast and tracks through more densely populated areas, Fitch said.

Although Lane was downgraded from a Category 5 on Wednesday and is expected to weaken as it approaches the state, “the storm remains a threat,” Fitch said.

Reinsurance exposure is expected through aggregate catastrophe treaties from primary cedents experiencing losses, Fitch said.

There are also several outstanding catastrophe bonds that include Hawaii in their exposure to hurricane/named storm risk, “but attachment points are typically high in the primary company's reinsurance program structure, requiring a substantial loss for the catastrophe bonds to respond,” Fitch said.

Five U.S. insurers have the largest homeowners’ exposures to the storm, according to Fitch.

State Farm Group, Heritage Insurance Group, including the Hawaii-focused Zephyr Insurance Co., USAA Group, Allstate Insurance Group, and Honolulu-based insurer First Insurance Co. of Hawaii, owned by Tokio Marine Holdings Inc., are the insurers with the greatest exposure to “these events,” Fitch said in its note.

Hurricane Iniki in 1992 was the last storm to make landfall in Hawaii with hurricane-level strength when it hit as a Category 4 hurricane with 145 mph wind speeds, causing some $5.5 billion of economic damage in 2017 dollars, according to National Hurricane Center estimates, Fitch said.