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Insurers, reinsurers expected to weather 2018 catastrophe losses

Insurers, reinsurers expected to weather 2018 catastrophe losses

The combined earnings for the U.S. insurance and global reinsurance sectors will absorb year-to-date catastrophe losses, including those stemming from Hurricane Michael, according to an analysis issued Wednesday by S&P Global Ratings Inc.

“Based on early estimated insured losses from the wind and storm surge of up to $4.5 billion, we predict Hurricane Michael will be an earnings event rather than a capital event for both the U.S. primary insurance and global reinsurance sectors,” said S&P in “Re/Insurers Tally Their Third-Quarter 2018 Natural Catastrophe and Man-Made Losses While Bracing For Hurricane Michael.” The report added, though, that the third quarter incurred “many manmade and natural catastrophes that we predict will hurt reinsurers’ operating results.”

Even if initial estimates of $2 billion to $4.5 billion for Hurricane Michael’s losses prove “somewhat low,” most primary insurers will be able to absorb their net losses, said Meyer Shields, managing director at investment banking firm Keefe Bruyette & Woods Inc. in Baltimore in an industry update issued Thursday.

He added, however, that “the lack of credible market share data keeps us from estimating losses for Bermudian reinsurers and the foreign and reinsurance subsidiaries of several mostly primary insurers. We expect reinsurers to bear more of Michael’s losses than Hurricane Florence’s, but we strongly doubt that (year-to-date) industrywide catastrophe losses will disrupt orderly and modestly soft January reinsurance renewals.”

That analysis reiterated Mr. Shields’ prediction earlier this week before the hurricane made landfall that the storm would have little impact on property reinsurance pricing trends.


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