"Munich, Swiss, Berkshire are reinsurers most exposed to Harvey: RBC"
From Artemis:
Analysts at RBC Capital Markets found that it is the usual
reinsurance suspects that are likely to be the most exposed to hurricane
Harvey on a reinsurance basis, with Munich Re, Swiss Re and Berkshire
Hathaway considered the three likely to take the greatest share of
reinsurance losses.
RBC’s team performed an analysis of the reinsurance programs of the
largest commercial insurers operating in Texas and found that these
three are the biggest reinsurance counterparties among the group it
sampled.
Hurricane Harvey is still largely a flooding event, but for
commercial property and industrial type coverage a greater proportion of
flood risks are insured and thus backed by reinsurance, than is found
with residential property risks.
Hence by analysing just commercial insurers arrangements, RBC
believes it can identify where a relatively large proportion of the
reinsurance exposure will come from and puts these three as top of the
list for taking a share of losses.
It’s important to remember here that all three of these companies
also operate as commercial insurers themselves as well, Munich Re
through its Risk Solutions unit, Swiss Re through its Corporate
Solutions unit, and Berkshire Hathaway through its Berkshire Hathaway
Specialty Insurance.
So while the three are put at the top of the list for taking
reinsurance losses from their counterparties in Texas, they are also
likely to take relatively large commercial insurance losses themselves
as well.
It’s also worth noting that at
least two of the three are likely major participants in the $1.024
billion reinsurance program of the National Flood Insurance Program’s
(NFIP), which it’s now believed could face a total loss, adding to the toll they will take.
Interestingly, Munich Re has almost twice as much of its catastrophe
loss budget remaining for 2017 compared to Swiss Re, according to RBC,
which could enable it to soak up a much larger loss than many
competitors before it begins to see its capital impaired in any way.
That said, hurricane Harvey is not going to impair the capital of any
major reinsurance firms, and is also unlikely to impair primary
insurers, or smaller reinsurers as well. Given the fact wind and surge
damage is expected to be so much lower than the economic cost of the
flooding, it seems Harvey will not support reinsurers desire to turn
pricing to any degree....MORE + many links
