Fitch Ratings has published a report looking at the total amount of reported insured and reinsured loss estimates for hurricane Sandy damage that have been announced by insurers and reinsurers since the storm struck the U.S. northeast back in October. Loss estimates have been coming in thick and fast through December and the total amount of reported losses to date is by Fitch’s reckoning over $17 billion. Fitch said they expect the total to reach $20 billion or more.
Fitch base their estimate of $20 billion or more on the loss estimates they’ve seen reported by insurers and reinsurers so far and their insight into who else is left to report estimates and how much the already reported numbers could creep upwards. Fitch note that their expectation is that the final insured industry loss toll will be towards the upper end of risk modellers estimates which peak at $25 billion.
Fitch said in the report that the complexity associated with a storm like hurricane Sandy and the uncertainty surrounding business interruption and flooding claims has made reporting estimates difficult for insurers and reinsurers. There are a number of major insurers yet to report a loss estimate and Fitch suggests that others will increase their estimates somewhat. Fitch said that the industry loss figure could jump by another $5 billion once these are all tallied.
Sandy has been an outsized loss event for auto and marine insurers who have taken large losses from the storm. Other than that the losses have tended to be incurred in commercial lines in greater proportions than personal lines. Primary insurers seem to have taken the lions share of the losses with reinsurers taking a reduced but meaningful share.
Fitch notes that Sandy demonstrated the favourable spread of loss and low concentration risk among insurers in the U.S. northeast, leading to losses being manageable for most. There were some incidences of areas where the risk models perhaps didn’t capture the full risk and companies may not have anticipated their exposure leading to some localised areas where companies became over exposed.
Fitch continues to state that it does not expect Sandy to be market changing and that Sandy helped to stabilise rates at the renewals, with some loss affected areas seeing upward rate movements. By Fitch’s reckoning Sandy could become the second most costly U.S. hurricane on record for the insurance and reinsurance industry.
We repeat here Fitch’s list of insurer and reinsurer reported minimum and maximum net loss estimates for hurricane Sandy, as of 4th January. You can access more insight and detail in Fitch’s report.
Insurer or reinsurer | Min estimate | Max estimate |
---|---|---|
Lloyd’s | $2,000 | $2,500 |
American International Group | $2,000 | $2,000 |
Allstate Insurance Group | $1,075 | $1,075 |
Travelers Cos. Inc. | $1,000 | $1,000 |
SwissRe | $900 | $900 |
Chubb Corporation | $880 | $880 |
Zurich | $758 | $758 |
Munich Re | $642 | $642 |
ACE Ltd. | $475 | $475 |
QBE Insurance, Ltd. | $350 | $450 |
Alleghany Corp. | $443 | $443 |
Axis | $375 | $375 |
Hartford Fire Group | $350 | $350 |
XL | $350 | $350 |
USAA Group | $334 | $334 |
Validus | $333 | $333 |
NJ Manufacturers | $300 | $300 |
Everest Re | $275 | $275 |
Arch | $170 | $240 |
PartnerRe Ltd. | $200 | $240 |
Amlin PLC | $230 | $230 |
Assurant | $200 | $220 |
Aspen Insurance Holdings Limited | $219 | $219 |
Hanover | $185 | $215 |
Catlin Group Ltd. | $200 | $200 |
Tokio Marine | $170 | $170 |
Allied World | $165 | $165 |
Endurance | $160 | $160 |
MetLife Inc. | $131 | $146 |
Hiscox Ltd. | $143 | $143 |
RenaissanceRe | $130 | $130 |
Markel | $75 | $125 |
Alterra | $90 | $120 |
Montpelier Re Holdings Ltd. | $95 | $95 |
Tower Group Inc. | $85 | $95 |
Beazley (London) | $90 | $90 |
Progressive | $90 | $90 |
Lancashire | $40 | $60 |
Argo Group | $45 | $55 |
Selective | $52 | $52 |
W. R. Berkley Corp. | $40 | $50 |
Kemper | $45 | $45 |
Flagstone | $39 | $39 |
Platinum Underwriters Holdings Ltd. | $38 | $38 |
American Financial Group Inc. | $25 | $35 |
Cincinnati Financial | $25 | $35 |
HCC Insurance Holdings Inc. | $30 | $35 |
Maiden Holdings Ltd. | $25 | $35 |
United Fire Group Inc. | $23 | $35 |
Mercury General | $20 | $30 |
Novae Group Plc | $25 | $30 |
Navigators | $18 | $25 |
RLI Corp. | $15 | $20 |
American Safety Insurance | $9 | $11 |
Meadowbrook Insurance Group Inc. | $5 | $7 |
Total | $16,187 | $17,170 |
.
Here’s a reminder of the main insured loss estimates from risk modellers and PCS as they stand currently:
– EQECAT at $10 billion to $20 billion
– RMS at $20 billion to $25 billion
– PCS initial estimate at $11 billion
– AIR Worldwide at $16 billion to $22 billion
– Reinsurance broker Holborn said Sandy could cost up to $30 billion
– Swiss Re estimate Sandy’s industry loss at $20 billion to $25 billion
– Munich Re said they expect Sandy to cost $25 billion
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