The aggregation of losses from recent natural catastrophe events will blow an estimated $150 to 200 million hole on MAPFRE’s 2017 net result and have caused the firm to re-examine whether it can reach its annual target profit.
MAPFRE had set its average Return On Equity at an average 11% and Combined Ratio at 96% average in March 2016 – however, these figures will now be reexamined and possibly changed after recent events impacted the firm’s large loss budget.
The firm’s risk management policy includes consideration of events with a bigger impact on insured losses than those experienced in recent weeks, and adequate protection is in place to cover claims arising from hurricanes Harvey, Irma and Maria, and the Mexico earthquakes.
MAPFRE added that with its catastrophic risk protection model, new events occurring this year would have a minor additional impact.
The heavy blows to insurers from the series of severe natural disasters that have struck the U.S., Caribbean and Mexico in recent weeks have shaken the industry, with some firms reporting potential failure to reach their target profit for the year as a result.
However, they also demonstrate the efficiency and importance of reinsurance in providing a safety net for insurers, governments, and individuals as they deal with the after-effects of the natural disasters and ultimately make the case for the purchase of higher levels of back-up.
