Global financial services ratings agency, A.M. Best, does not expect to take any Credit Rating actions against insurers in the Caribbean and Puerto Rico after the devastating impacts of hurricanes Maria and Irma.
Despite loss estimates from Maria being large, A.M. Best doesn’t expect to take any rating action against insurers in both the Caribbean and Puerto Rico, at this time, based on initial loss data and information it has received from rated carriers.
The ratings agency notes that the loss estimates for Maria look to have fallen within insurers’ net catastrophe reinsurance limits, and that losses are likely to remain within companies’ limits and overall risk tolerances.
Local insurance companies in the regions typically retain minimal property exposure, and make extensive use of both quota share and catastrophe reinsurance to limit exposures, something that has benefitted firms in recent times.
A.M. Best highlighted earlier this year, before the storms occurred, that Caribbean cedants were taking advantage of the softened reinsurance market, securing efficient protection under potentially more favourable terms and conditions.
“While A.M. Best does not anticipate any rating actions at this time, some concerns remain regarding liquidity, as most of these companies look to their reinsurers to provide the funds to pay claims,” warns A.M. Best.