Despite a challenging opening six months of the year, combined with the impact of hurricane Harvey for Texas insurance companies, A.M. Best expects firms to withstand losses from the storm.
The global rating agency has said that it expects Texas insurers to be able to withstand the loss impact from hurricane Harvey, noting that the event is unlikely to result in losses that exceed the top reinsurance limits of firms that underwrite business in the state.
“Leading up to Hurricane Harvey, several Texas insurers experienced a challenging first half 2017 as a result of spring weather losses.
“Combining those first half of 2017 losses with those from Hurricane Harvey may have an impact on company earnings and capitalization, which could add additional negative rating pressure,” said Angelo Lozano, a financial analyst at A.M. Best.
In recent times, the soft reinsurance market landscape has enabled insurers to take advantage of more favourable terms and conditions from reinsurance companies, including securing higher limits on catastrophe programs and also extended hours clauses.
However, the scope of Harvey means it’s challenging to determine the final damage, with the top priority remaining to be rescue missions across the state.
Currently, A.M. Best doesn’t expect a substantial number of rating actions from Harvey, but does warn of additional pressure on the performance of regional property and auto underwriters.
A.M. Best rates 15 insurance firms in Texas with premium revenue that accounts for over 50% of their total book, four of which have a negative outlook at their current rating levels.
Jennifer Marshall, director, A.M. Best, said; “While earnings for the third quarter 2017 will clearly be impacted, at this time, A.M. Best does not anticipate that Harvey will prove to be a capital event for the commercial segment overall.
“The impact on individual companies will continue to be assessed as the situation stabilizes and loss estimates are made available.”
