October 21, 2014 by Canadian Underwriter
Insured losses from two hurricanes hitting Bermuda and Hawaii this month are expected to be limited, Fitch Ratings said this week.
Hurricane Gonzalo (making landfall as a Category 2 storm) and Hurricane Ana (making landfall as a Category 1 storm) threatened to cause major damage to Bermuda and Hawaii respectively, but neither event will contribute much to insured losses for the year, and overall industry catastrophe losses are still expected to be below average in 2014, Fitch said.
“As such, Fitch expects soft market pricing conditions in property catastrophe reinsurance to continue at the January 2015 renewals and beyond,” the ratings agency noted.
Extensive hurricane preparedness in Bermuda, along with the moderate intensity of the storm hitting Hawaii have translated to lower insured losses, according to Fitch.
“The absence of large losses since 2012, abundant capacity levels and sluggish demand from reinsurance buyers have resulted in a softening market for reinsurers, characterized by falling prices and, less visibly, weakening terms and conditions,” it noted.
“This deteriorating reinsurance market environment led Fitch to assign a negative fundamental sector outlook to global reinsurance in January 2014. Fitch estimates that it would likely take a major industry loss event nearing $100 billion to potentially result in a broad hardening of property and property catastrophe market prices.”
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