Fitch has warned that although hurricane Harvey is expected to be an earnings event for the reinsurance sector it could have left some with thin catastrophe budgets for the remainder of the year. And with hurricane Irma tracking to potentially make landfall along the U.S. coastline this weekend, some reinsurers’ cat budgets could be completely wiped out.
Fitch expects the impacts of hurricane Harvey to be manageable for the global reinsurance industry, assisted by the low-level of catastrophe losses in the first-half of 2017. However, the ratings agency warns that the storm “may leave some reinsurers close to exhausting their catastrophe budgets for the year.”
This suggests that some in the sector might not have much room to manoeuvre another storm like Harvey, and with hurricane Irma heading to the Caribbean as a Category 5 storm, and potentially making landfall along the Florida, U.S. coastline this coming weekend, some reinsurance companies could see their catastrophe budgets completely wiped out with around a quarter of the year remaining.
As at 15:00 UTC, Tuesday September 5th, Major category 5 hurricane Irma is currently heading west across the Atlantic, with winds of 180 mph and a forecast that shows maintained intensity and a potential threat to the U.S. coastline by this weekend, which includes south Florida, although there remains some uncertainty regarding the exact path.
Hurricane Irma is expected to remain a Cat 4 or even Cat 5 hurricane as it tracks towards the northern Leeward Islands, heading to the Bahamas on Friday and then onwards where it is currently forecast to curve north towards the U.S. at southern Florida.
Insurance and reinsurance companies will be keeping a close eye on Irma as it continues its track towards the U.S. coastline. And with the catastrophe budgets of some in the industry reportedly running very close to empty, it might not take too much to push them into the red, while a landfalling Category 5 storm along the Florida coast would likely deplete the remaining catastrophe budgets of numerous reinsurers.
NOAA warns of a dangerous storm surge and potentially devastating winds for the Leeward Islands should hurricane Irma track directly across it. This storm poses a significant threat to lives at this stage.
