Primary insurers to bear more impact from 2026 winter storm losses than reinsurers: AM Best

Losses from winter storms Hernando and Fern, both of which have occurred in the opening months of 2026, are expected to impact primary insurers more than reinsurance capital providers, according to ratings agency AM Best.

In a new report, AM Best stated that while these losses will contribute to a meaningful decline in first-quarter underwriting profits, the impact is expected to be less severe than that of the 2025 California wildfires.

“Winter Storm Hernando dropped record snowfall and blizzard conditions in the northeastern United States. The storm resulted in widespread power outages, particularly in Massachusetts, New Jersey, Delaware, and Rhode Island. States of emergency closed many businesses and thousands of airline flights were cancelled. Newark Liberty International Airport reported over two feet of snow on its runways, with totals in other locations exceeding 30 inches,” AM Best explained.

Preliminary insured loss estimates for Hernando are still being calculated; however the total is expected to be significant.

Combined with losses stemming from winter storm Fern, which affected the United States from January 23rd through 26th, the first quarter of 2026 will prove to be an above average quarter in terms of insured losses, AM Best noted.

A couple of major catastrophe risk modelling firms have already released estimates for insured losses from winter storm Fern, with Verisk saying that the total could reach US $4 billion, while Karen Clark & Company (KCC) previously pegged private insurance industry losses from winter storm Fern in the US at $6.7 billion, with estimated losses the highest in Texas and Tennessee.

Insurance and reinsurance broking group Aon also reported that Fern is expected to cause insurance market losses of more than one billion dollars.

Furthermore, investment manager Twelve Securis also warned last month that the combination of Fern and freezing temperatures could contribute to the gradual erosion of aggregate limits in certain catastrophe bonds. The same could be true of Hernando.

“Fern was concentrated in southern states with infrastructure less prepared to weather winter storms. Hernando impacted the northeastern US, where wintry conditions are more expected. Significantly more commercial and residential values are prevalent in the areas impacted by Hernando, which could cause a moderate impact to aggregate earnings. As the two storms are separate and distinct events, each of these events may be contained within the primary carriers; AM Best believes reinsurers will face lesser impacts,” AM Best said.

Importantly, AM Best also highlighted how homeowners, commercial property, and auto usually tend to be the property and casualty lines that are most impacted by winter storms.

As well as this, business interruption due to emergency closures and flight cancellations will also add to the industry’s insured losses from both events.