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Reinsurance prices expected to remain strong: Morgan Stanley

Posted On: Sep. 29, 2022 12:47 PM CST


Reinsurance prices are expected to remain strong into 2023 following Hurricane Ian, according to a report released by Morgan Stanley on Wednesday.

Current insurance industry loss estimates range from $10 billion to more than $30 billion from Hurricane Ian and individual company exposures are likely manageable, the New York-based investment bank said.

Hurricane Ian made landfall Wednesday as a Category 4 hurricane near Cayo Costa, Florida, with winds of 150 mph.

Total insured catastrophe losses for fiscal year 2022 should be less than $100 billion, but reinsurance pricing into 2023 should remain strong, according to Morgan Stanley.

“We see Hurricane Ian as an incremental boost to reinsurance pricing momentum,” in an already hardening market, the Morgan Stanley analysts said.

Catalysts for this hardening include tighter capacity, increasing loss costs and unabated inflationary trends, now further supported by a major industry loss event, the report said.

Hurricane Charley in 2004, which made landfall on Sanibel Island as a Cat 4, sweeping up the peninsula and ultimately into South Carolina, caused a total of $24.6 billion in damage, adjusted to 2022 dollars.

However, that storm would see much higher losses today, since population density and home values have skyrocketed in the region since 2004, Morgan Stanley said.

Separately, credit rating agency DBRS Morningstar said Thursday sustained increases in reinsurance rates globally are expected to continue for the remainder of the year and into 2023.

Losses from Hurricane Ian, although significant, are expected to be manageable for the global reinsurance industry given very high solvency levels, DBRS said in its report.