Fitch Ratings expects US property/casualty insurers to face record catastrophe losses for this year’s first quarter, following extensive property damage from winter storm Uri.
The widespread scale and claims volume of the event could drive ultimate insured losses to a range of $10 billion to $20 billion, the ratings agency said.
As a point of reference, US industry first-quarter catastrophe losses have averaged $4.6 billion over the prior 10 years, with a high of $7.6 billion in 2017.
Fitch notes how cold temperatures and ice are generating hundreds of thousands of claims from frozen/burst pipes, roof damage, power outages and lost business income that will pressure near-term insurer results.
However, losses should be most concentrated within large homeowners writers that have effective claims resources and are well capitalized to absorb short-term volatility.
Texas has 4.9 million homeowners’ policies with over $10 billion in annual written premiums, according to the Texas Insurance Department.
Cat losses tied to storms in southern states are expected to materialise from homeowners and auto business and various commercial insurance coverages, Fitch says.
Given the wide geographic spread of the event, a large number of individual carriers are likely exposed to losses from these events.
Insured losses in Texas are likely heavily weighted toward personal lines coverage from homeowners losses and, to a lesser extent, automobile claims relative to commercial lines coverage.
Based on 2019 direct premium volume, the largest homeowners writer in Texas and Louisiana combined by some measure is State Farm Mutual Insurance Group (19.6% market share) followed by The Allstate Corporation (13.6%) and USAA (9.4%).
