Analysts at Moody’s expect the impacts of hurricanes Harvey, Irma, and Maria to result in an overall loss for the Lloyd’s of London specialist insurance and reinsurance marketplace.
Combined, Lloyd’s announced previously that it expects hurricanes Harvey and Irma to drive losses of around $4.5 billion, net of reinsurance, estimates that are based on known modelled exposures.
At the time of the announced $4.5 billion expected loss, Lloyd’s said it was too early to provide any loss estimates for hurricane Maria, and is yet to release any figures. Although, industry analysis has suggested that Lloyd’s could have a market share of 8% or higher, making it one of the most exposed to Maria losses in Puerto Rico.
To date, Moody’s says that Lloyd’s has already paid out over $400 million in claims relating to Harvey and Irma, and expects the additional impact of Maria to lead the market to a loss.
“We expect that the combination of the three major hurricanes will drive an overall loss for the Lloyd’s market, which reported pre-tax profits of around £2.1 billion for 2016, including £2.1 billion of catastrophe and large losses,” explained Moody’s.
Moody’s analysts note that when compared to the first-half of 2016, the Lloyd’s market’s pre-tax profits are already down 16% to £1.2 billion, in H1 2017.
So, Lloyd’s was clearly feeling the pressures of the challenging reinsurance market landscape before the events, and with losses from just Harvey and Irma already being more than double the £2.1 billion catastrophe and large losses Lloyd’s reported last year, it perhaps isn’t too surprising Moody’s expects the market to record a loss driven by these events.
Furthermore, Moody’s warns that “absent any actions to increase available capital or reduced required capital, Lloyd’s may report a moderate erosion of its market wide Solvency II and central Solvency II ratios, which stood at 147% and 211%, respectively, as of June 30 2017.”
