The happy times seem to be over. From Artemis:
It’s very early days to speculate on landfall for major hurricane Irma, which became a Category 5 monster storm this afternoon with winds of 180 mph, but should the forecast track prove correct and Irma make landfall in Florida it is expected that it would hit reinsurance interests hard, according to KBW.
Hurricane Irma is tracking towards the northern Leeward Islands of the Caribbean, where catastrophic impacts are possible and lives at risk. Following that Irma will track towards southern Florida, where it is forecast to make a turn towards the north and come ashore, with experts suggesting it will still be a very major storm at that stage.
While recent hurricane Harvey is not expected to be the catastrophe event that could turn reinsurance industry pricing, hurricane Irma looks like its worst case scenario (based on the latest forecasts) could at least put a much firmer floor in place.
Harvey has largely been an event for the insurers, with reinsurers expected to pick up a share, but less significant than other hurricane events due to the water driven nature of most of the losses.
Hurricane Irma’s potential impact could actually increase the losses for the industry from Harvey, KBW’s analysts suggest, explaining that a second hurricane impact in such quick succession could drive up the cost of repairs and materials, causing inflation to Harvey claims.
But more of concern is the direct Florida landfall from a major hurricane Irma, which would; “Probably impact the reinsurers more than would landfall in any other state,” KBW’s analysts explain.
As a result the analysts expect that reinsurers, such as the Bermudian companies, will underperform the broader markets this week due to Irma uncertainty. In fact the Dow Jones reinsurance index fell near 2% in trading early today and has yet to recover, while the share prices of the major European reinsurers have also declined today, which is likely due to the Irma threat.
But really showing how the markets view the threat from hurricane Irma, Floridian primary insurers stock prices dropped as much as 15% today, as nervous investors took in the latest forecasts.....MORE
