The California wildfires, which caused an estimated $12.5 billion in insured losses, are likely to fully blow out European reinsurers Q4 catastrophe budgets, according to JP Morgan.
The European reinsurance sector will be challenged by catastrophe losses that are forecast to be slightly above the quarterly budget, after the California wildfires alone pushed loss levels to that of the average for the quarter.
Thus any additional losses, from other wildfire and storm events, will push the aggregate loss figure above normal levels.
JP Morgan analysts said they expect “cat losses in the sector to be slightly above the quarterly budget,” adding “we are not aware of any significant man made losses during the period, which may provide a partial offset.”
Following one of the most expensive periods in terms of catastrophe losses on record in Q3 2017, JP Morgan expects the reinsurance sector to report further catastrophe losses in Q4, and assumes the Q4 catastrophe losses will be slightly ahead of budgets for the quarter.
However, European reinsurers could find some respite in P&C reinsurance underwriting performance, which should be close to a ‘normal’ level, due to a possible partial offset from lower than normal man-made losses, according to JP Morgan.
