With estimates among the three major catastrophe modeling firms ranging from $6 billion to $18 billion, losses from Hurricane Ike will be material to both the primary insurers located in the U.S. and to the global reinsurance industry, according to Fitch Ratings in a new report.
'If initial loss estimates are accurate, Ike could be the third largest insured loss from a hurricane, behind only Hurricanes Katrina and Andrew,' said Senior Director Don Thorpe. 'Even if actual losses are at the low end of estimates, Ike will likely still rank in the top ten costliest US hurricane insured losses.'
Significant in its own right, Hurricane Ike contributes incrementally to what has already been a significant year for catastrophe losses in the U.S. Losses from Hurricane Ike are likely to push year-to-date U.S. insured catastrophe losses to $25 billion, representing its highest levels since 2005. Further, several insurers have incurred significant asset impairments as the result of continuing capital market turmoil.
Against this backdrop, the insurance industry remains mired in soft market conditions. While Fitch has not taken rating actions on any insurers tied to Hurricane Ike or other catastrophe events in 2008 to date, 'Fitch continues to closely monitor the sector, concerned that this confluence of events represents the worst of both worlds for the insurance industry where surplus is consumed by catastrophe losses and asset write-downs, yet there is no catalyst event to reverse soft market pricing,' said Managing Director Jim Auden.
'Hurricane Ike: Possibly the Third Largest Insured Hurricane Loss in History' is available at www.fitchratings.com under the following headers:
Financial Institutions then Insurance then Special Reports
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Contacts:
James B. Auden, CFA, 312-368-3146
Brian
C. Schneider, CPA, CPCU, 312-606-2321
Donald F. Thorpe, CPA, CFA,
312-606-2353
or
Media Relations:
Sandro Scenga,
212-908-0278, New York
