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Q3 cat losses are expected to be largest since 2017: Fitch



The insurance industry's disaster losses in the third quarter are expected to be the largest since the third quarter of 2017, but insurers and reinsurers are "largely well positioned" to absorb them, Fitch Ratings Inc. said briefly on Thursday. [19659002] Third quarter events could amount to about $ 25 billion, making 2020 an "above average" year for natural disaster losses, Fitch said.

This year's real estate losses / accidents during the third quarter were driven by an increased frequency of events, Sa Fitch, including Hurricanes Isaias, Laura and Sally; the derecho windstorm in the Midwest; and forest fires in California and Oregon.

Some insurers and reinsurance companies may also include losses from the August 4 explosion in Beirut in third quarter results.

However, Fitch stated that insurers and reinsurance companies had sufficient capital. [1

9659002] "Carrier's balance sheets were prepared for a potentially strong hurricane season and invested asset values ​​recovered in recent months from previously unrealized losses," Fitch said.

The events will dampen revenue but not capital, it said.

"Fitch expects earnings to remain weak in the third quarter following declines in the first half, but capital levels are broadly strong, with little capital decline expected from these events."

Hurricane Laura was the largest individual loss event with estimated insured losses. between $ 11 and $ 15 billion. Hurricane Delta, the second hurricane to land in Louisiana in less than a month, is expected to add $ 1 billion to $ 3 billion in insured losses, Fitch said.

Allstate Corp. reported about $ 1.1 billion in disaster losses in July and August. , which exceeds the sum of any third quarter period since 2011. Travelers Cos. Inc. stated in quarterly earnings comments that by the middle of 2020, it had almost reached the annual total deductible on its reinsurance program.

During the first half of this year, global natural disaster losses were below average, and Fitch quoted Aon Securities Corps' estimated insurance losses of approximately $ 26 billion in the first half of the year, compared to a 10-year average (2009-2019) of $ 38 billion.

Losses related to the coronavirus pandemic are expected to increase further during the rest of the year, says Fitch, adding: "This accumulation of losses is expected to exceed many individual business disaster budgets and further pressure for full-year 2020 revenues.

Fitch expects that the more moderate insurance losses of individual events will land primarily on primary insurers rather than reinsurers, as catastrophic losses on loss reinsurance programs absorb a smaller proportion of claims. However, the increased frequency of catastrophic events during the second half of the year is likely to continue to push upwards on the reinsurance rate during the coming renewal period January 2021, says Fitch.

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