Canadian Underwriter
News

Hurricane could increase strain on capital positions: FitchRatings


June 1, 2011   by Canadian Underwriter


Print this page Share

A hurricane that makes landfall and generates substantial insured losses could represent a more material strain on a company’s capital positions, according to FitchRatings.
Early forecasts predict above average hurricane frequency, with several landfalls anticipated along the U.S. coastline, Hurricane Season 2011 reports.
The 2011 catastrophe budget has already been exceeded by many reinsurers after record-setting catastrophe losses in the first half of 2011 – even before the start of hurricane season, the report says.
While (re)insurers in Fitch’s rating universe have withstood recent losses, a hurricane could provide further strain on capital positions.
“Ratings actions for individual (re)insurers in the event of material hurricane losses would consider the size of the loss relative to capital, options pursued to replenish capital and underwriting prospects going forward,” the report reads.
There is a 94% probability that one or more tropical storms will make landfall, an 86% probability one or more category 1-2 hurricanes will make landfall and a 72% probability that one or more category 3,4, or 5 hurricanes will make landfall in the United States.
“From the perspective of the (re)insurance industry, the intensity and location of storms making landfall are the most critical variables,” the report states.
The Gulf Coast has a higher probability than Florida and the East Coast for a tropical storm at 79% versus 71%.
However, Florida and the East Coast face a 64% probability of a category 1-2 hurricane versus 62% probability in the Gulf Coast.
There is a 48% probability a category 3, 4, or 5 hurricane will make landfall in Florida and East Coast, with a 47% probability in the Gulf Coast.


Print this page Share

Have your say:

Your email address will not be published. Required fields are marked *

*