P&C insurers well-prepared for cat losses, despite recent U.S. tornado activity

Despite losses from the recent tornado activity in the United States, property and casualty insurers there are still in a good position to take on catastrophe losses this year, especially from the likely active hurricane season, according to a briefing from A.M. Best.

The major tornado that struck Oklahoma last month, and other storms in that part of the U.S., will likely have an impact on second-quarter earnings for some insurers, the rating agency noted.

Related: P&C industry well-positioned to take on 2013 hurricane season: Fitch

Still, the P&C industry in the U.S. did experience a “sharp decline in catastrophe losses” in the first three months of this year, it said.

Respondents to a survey conducted by A.M. Best reported pre-tax accident-year catastrophe-related losses of $2 billion for Q1, down from $3.2 billion for the same period last year, the firm said.

Most of that was in personal lines, and with no major U.S. catastrophe events during the quarter, reinsurance losses were negligible, the rating agency noted.

While the forecast for this year’s Atlantic hurricane season is calling for more storms than average, the P&C industry’s risk management efforts make it well-prepared, A.M. Best said.

“Superstorm Sandy tested the effectiveness of risk management efforts,” the briefing said. “In addition, many P/C writers are beginning to use data collected from Sandy to revise underwriting practices and implement numerous risk management initiatives to address adjustments to catastrophe models.”

Overall, the company said it isn’t expecting any significant rating actions following a catastrophe.