Losses from Hurricane Isaac are expected to be material, but manageable, for U.S. insurance firms, says Fitch Ratings in a new report.
The ratings agency reports that damage estimates among catastrophe modeling firms range from US$0.5 billion to US$2 billion. “If actual losses from Hurricane Isaac end up within current ranges, primary insurers will bear most of the loss,” said associate director, Chris Grimes. “However, as incurred losses rise, the chances of losses being allocated to the reinsurance industry increase.”
Given that the overall industry entered the hurricane season with a solid capital position, Fitch says that it is unlikely that many insurers will require significant capital-raising to offset losses from Isaac.
Hurricane forecasting organizations generally expected 2012 to generate a below-average number of storms along the Atlantic and Gulf Coasts, Fitch notes. However, it says that, as the year has progressed, forecasts for hurricane activity have been revised upwards towards an average, or above-average, season.