Hurricane losses define 2017—but Trump’s tax plans may be critical to 2018

27-12-2017

The exceptionally costly hurricane season, in which hurricanes Harvey, Irma and Maria (HIM) made landfall in the US, was easily the most important event to impact the Bermuda re/insurance market, according to an end of year survey conducted by Bermuda:Re+ILS.

Some 69 percent of respondents to the online survey highlighted this as being the most influential factor of the year, although a number also noted the California wildfires and the influence of the Trump administration in the US as being important factors.

Greg Wojciechowski, chief executive of the Bermuda Stock Exchange, said overall natural catastrophe activity in 2017, particularly hurricanes HIM, will likely place 2017 as a very important year for the alternative reinsurance market as well as the P&C reinsurance markets.

“It is expected that the alternative reinsurance market will contribute to payouts through collateralised reinsurance, sidecars, ILWs and cat bonds,” he said.

Bermuda-based reinsurers are expected to pay around 25 percent of the losses from the hurricanes, which could reach £100 billion ($133 billion) in aggregate. Many believe this will lead to hardening rates in the short term at least.

A number of market participants also noted that pending US tax reforms could be a big deal for Bermuda’s reinsurers.

Brad Kading, the outgoing chief executive of the Association of Bermuda Insurers and Reinsurers (ABIR), said that US tax reforms could be important because of their impact on affiliate reinsurance. A number of respondents pointed out that US tax reforms could be the big talking point of 2018.

Greg Hendrick, president of property & casualty insurance and reinsurance at XL Catlin, added: “While the Trump administration still might be the largest impact if tax reform does get done, clearly the 2017 wind season is one to remember. It is a strong reminder of why the market exists and the value we play in the overall risk management of catastrophes.”

Some respondents cited the UK’s withdrawal from the EU as being an important factor within the context of 2017 and others also noted the growing influence of ILS on the market. “The resilience of the ILS market changes the fundamentals of risk markets,” said Robert Arvanitis, CEO, Risk Finance Advisors.

Hurricane losses, Bermuda, Insurance, Reinsurance, Nat cat, Survey, Donald Trump, US Tax

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