Reinsurers prepared for average hurricane season
Reinsurers rated by Moody’s are entering the 2019 hurricane season with solid capital positions to withstand potential losses arising from hurricanes, according to the rating agency.
Reinsurance capital in the sector has largely remained steady despite nearly $240bn of total insured catastrophe losses in 2017 and 2018, from Hurricanes Harvey, Irma, Maria, Michael and Florence, among others.
Reinsurers have also been forced to recalibrate catastrophe assumptions to better model their exposures, amid escalating loss costs and underappreciated risk exposures from things like wildfire. Alternative capital has not been available to support new business, while the poor performance of insurance-linked securities (ILS) has discouraged further allocations to this asset class.
However, experts predict that this season's storm activity will be near historical averages for the Atlantic Basin, bringing some respite to re/insurers. The National Oceanic and Atmospheric Administration (NOAA) 30-year historical model suggests that a near-normal scenario is the most likely (40 percent), with identical probabilities of seeing an above-normal or a below-normal season (30 percent).
According to NOAA an average or near-normal season produces 10-15 named storms, four to nine hurricanes, and one to four major hurricanes.
The 2019 Atlantic hurricane season officially runs from 1 June to 30 November, affecting a region spanning parts of the North Atlantic Ocean, the Caribbean Sea and the Gulf of Mexico.
