Reinsurance News

Reinsurance pricing to remain strong regardless of benign hurricane season: Morgan Stanley

7th September 2022 - Author: Kane Wells

Analysts at Morgan Stanley have said reinsurance pricing will remain strong regardless of a potentially benign hurricane season in 2022.

hurricane-florence-nasaThe report notes there have been no hurricanes in the first half of 2022’s Atlantic storm season, with only three named tropical storms.

Morgan Stanley reviewed the list of landfall hurricanes on the continental US from 1851-2021 to see how often there were no hurricanes during the first half of the season, noting what it might mean for the remainder of the season.

Of the 171 years they examined, 48% had no hurricanes during the first half of the storm season. 52% did experience hurricanes during those same months.

In the years that the first half of the season did not have a hurricane, the second half of the season typically showed a lower frequency of hurricanes as well as lower severity of hurricanes.

Stratumn, by SIA Partners

Years with no hurricanes in the first half of the season on average experience fewer than one hurricane in the second half, with an average hurricane category of ~1.70.

Years that did have hurricanes in the first half of the season experienced a higher number of hurricanes in the second half ( ~1.16) with an increased average category of ~2.52.

Morgan Stanley commented, “While we are certainly not climatologists, historical statistics alone bode well for the coming second half of 2022 hurricane season.”

While both CSU and NOAA reduced their 2022 Atlantic hurricane season forecasts in early August, both still maintain a higher-than-average prediction.

Both sources cite the likely persistence of La Niña as a catalyst for the active season. Additionally, Atlantic Sea surface temperatures are slightly warmer than average, which adds fuel to potential developing storms.

Despite this, Morgan Stanley affirms a positive outlook for reinsurance pricing, stating, “we continue to believe that even with a benign overall season, reinsurance pricing should remain strong as we enter 2023.”

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