hurricane Matthew 2016

Analysts at J.P. Morgan have said that an approximate $5 billion insured industry loss from hurricane Matthew would see reinsurers front roughly 50% of the bill, and would see Europe’s big four reinsurers call on divergent levels of retrocession.

Risk modelling firm AIR Worldwide has provided its initial estimate of insurance and reinsurance industry losses from hurricane Matthew, putting the figure somewhere in a range from $2.8 billion to as high as $8.8 billion across the United States and the Caribbean.

Primary insurance company loss estimates are now being announced, with the latest being Federated National Insurance (FedNat), which is set to call on its reinsurance panel, while Homeowners Choice Group (HCI) said the loss will not trigger reinsurance recoveries outside of HCI.

Risk modelling company Karen Clark & Company (KCC) has estimated that the insurance and reinsurance industry will be liable for an industry loss of around $7 billion from hurricane Matthew’s impact on the United States.

Heritage Insurance Holdings Inc. said it expects its losses from hurricane Matthew will be less than $100m, with losses above a $40m retention falling within the insurers reinsurance tower but missing the $727.5m of Citrus Re catastrophe bonds.

Losses to the insurance and reinsurance industry from hurricane Matthew are expected to largely fall within the sector’s catastrophe budgets for the second half of 2016, according to analysts at Peel Hunt.

All three tranches of the Laetere Re Ltd. (Series 2016-1) catastrophe bond and the single tranche of the First Coast Re Ltd. (Series 2016-1) cat bond, traded down at lower and even distressed pricing at the back-end of last week due to hurricane Matthew’s approach.

The Swiss Re Global Cat Bond Index has declined by the largest amount since 2012 on the threat posed by hurricane Matthew’s approach towards Florida, as mark to market losses flowed through into investor and brokers cat bond pricing expectations.

Insurance and reinsurance sector losses from hurricane Matthew are currently converging on a total impact of around $6 billion, but it is still very early to put a figure on the impact of Matthew given the large area of U.S. coastline affected.

Investors in insurance-linked securities (ILS) funds (or other structures such as sidecars) will share a “material portion” of the eventual losses from hurricane Matthew, according to Bill Dubinsky of Willis Capital Markets & Advisory (WCMA).