Hurricane Irma will not turn the market or cause a significant change to the wider market, but prices in locally affected areas are likely to be impacted and as the market reshuffles in its aftermath Europe’s big four reinsurers are likely to come out as the most stable players, A.M. Best said at the annual Monte-Carlo Rendevous de Septembre.
A.M. Best Director, Greg Reisner, said; “We have a huge event that’s hovering over Florida, whether or not this event is going to materialise into a change in the market that we see, there’s no question that it’s going to translate into an underwriting loss.
“We ran through a $75 billion scenario and a $125 billion scenario which could take about 10% of capacity out of the market, clearly it’s a loss of capacity but not enough to change the market.”
The European big four are likely to come out as the strongest players in the market adjustment that follows Harvey and Irma, with lines of business most protected by sophisticated diversification.
Reisner, continued; “The European big four have a slightly higher combined ratio, that has to do with their books of business versus the U.S., Bermuda and Lloyd’s which are more short-tail oriented with less diversified books of business and certainly with this Irma event they’re more prone to take losses here.
“The reason they’re moving so much in tandem is the benign CAT activity, we expect the European big four to look better quite frankly after this activity relative to the sector.”
Managing Director, Analytics at A.M. Best, Greg Carter, added; “The European big four given their diversity and lines of business will probably exhibit greater stability.
“The U.S. and Bermuda are more U.S.-centric, property oriented, don’t have the diversified business lines, so they’re probably going to see the greatest impact from an event like Irma.”
