Insurance Linked Investments

The eventual insurance, reinsurance and perhaps ILS fund industry losses from hurricane Michael’s strong Category 4 landfall on the Florida Gulf Coast yesterday are unlikely to be sufficient to move the market, according to brokers, rating agencies and analysts.

The wind and storm surge related insurance industry loss from hurricane Michael is estimated to be between $2 billion and $4.5 billion by Corelogic, based on a pre-landfall data assessment of the storms impacts to insured assets.

U.S. primary insurance giant Chubb has today pre-announced an estimate of its third-quarter catastrophe losses, pegging them at $450 million before tax and net of reinsurance, which is below where some industry analysts had expected them to be.

The precise location where hurricane Michael makes its expected Category 4 landfall today will have a significant bearing on the potential for ILS impacts, according to Twelve Capital, who also estimated on a stochastic basis that the eventual industry loss could be $5 billion to as much as $15 billion.

A more intense now Category 4 hurricane Michael with 145 mph sustained winds and higher gusts means a potential doubling in the economic impacts caused by the storms surge and wind damage to around $16 billion, according to new simulated model runs.

Allianz Global Corporate & Specialty (AGCS), a division of global insurance and reinsurance firm Allianz, has announced that its Alternative Risk Transfer (ART) unit is reshaping. The move sees the Insurance-Linked Markets team transition to a standalone business line, called Capital Solutions.

Catastrophe risk modelling firm RMS has highlighted some key differences between hurricane Michael, which is heading for the Florida coast and expected to be a major category storm at landfall, with recent hurricane Florence.

The main Floridian primary insurers as well as some of the largest national U.S. insurance firms are among the most exposed to the impacts of hurricane Michael, according to A.M. Best data.

The insurance-linked securities (ILS) market stands poised for significant growth, according to industry leaders, with $300 billion deemed easily possible and an expectation that the capital markets will have an increasingly important role to play in insurance and reinsurance risks over years to come.

Specialty insurance and reinsurance group Lancashire Holdings Limited has pre-announced some expected third-quarter catastrophe and marine losses, which the firm expects will drive it to a negative return on equity for the quarter.