NU Online News Service, Aug. 30, 12:26 p.m. EDT
Rating agency Standard & Poor's says it does not expect Hurricane Irene to affect the industry's creditworthiness and it expects "few, if any" rating changes as a result of the storm.
At currently estimated insured losses, Hurricane Irene will affect primary insurers more than reinsurers, since the primary insurers retain a greater property-catastrophe risk.
In its analysis, S&P uses reports that Hurricane Irene will cause less than $5 billion in insured losses.
Today, catastrophe modeler AIR Worldwide says it expects insured losses from the storm to be between $3 billion and $6 billion.
Insurers and reinsurers are well-capitalized to absorb the losses, says S&P.
Robert Hartwig, president of the Insurance Information Institute, says insurers entered the hurricane season with record claims-paying capital.
In a statement released before Hurricane Irene made landfall, rating agency A.M. Best says that although the property and casualty industry remains well-capitalized, "some individual companies may face capital and, ultimately, rating pressure," given the amount of catastrophe losses to the industry in 2011 and the potential for more hurricanes this year.
Insured losses from Hurricane Irene will add to $17.3 billion in insured losses in the U.S. as of June 30—a 162 percent increase over insured losses during the first half last year.
As of June 30, this year had set a record with $55 billion in insured losses globally. That is more than four times the 10-year average.
A.M. Best says it expects companies to report preliminary loss estimates from Hurricane Irene, including assessments levied on companies by states' residual markets, to be reported to the agency in order for it to evaluate companies relative to previous loss expectations.
S&P says it believes the earnings of insurers and reinsurers will erode, and many will face underwriting losses for the year, due to the accumulation of catastrophe losses to date as well as less-favorable reserve releases, which have supported underwriting results in recent years.
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