Hurricane Milton could use P/C insurers’ 2024 catastrophe budgets

S&P Global Ratings said potential losses from Hurricane Milton could fully deplete 2024 natural catastrophe budgets for U.S. property/casualty insurers, hurting underwriting margins and earnings.

In a report titled “Hurricane Milton: Implications for U.S. Rated Insurers and Global Reinsurers,” released hours before the hurricane made landfall, the rating agency estimated the catastrophe budgets of 16 rated property/casualty insurers at about 40 billion dollars, while year-to-date, losses caused by catastrophes have already reached 26 billion dollars.

“Given that many primary insurers are already close to 2024 catastrophe budgets based on losses in the first half of the catastrophe, we believe potential losses from Hurricane Milton, combined with other weather-related losses to date, would could fully deplete catastrophe budgets for 2024. This will affect underwriting margins and earnings, but not capitalization,” said the report, which puts year-to-date pre-tax profits at about $69 billion.

“While the magnitude of insured losses remains unknown, most U.S. P/C primary insurers entered 2024 with substantial capital buffers at the 99.99% confidence level under our risk-based capital adequacy model,” said S&P, indicating that capitalization is expected to remain. stable.

In contrast to pressures on primary insurers’ earnings, S&P said there is enough room in reinsurers’ catastrophe budgets to keep earnings intact.

“The reinsurance industry’s combined expected 2024 earnings of $44.8 billion and its catastrophe budget of $19.2 billion provide a substantial buffer of approximately $64 billion before any catastrophe losses – affect its capital,” S&P said, reporting the results of 19 rated reinsurers. “While capital levels and risk appetite may vary by individual reinsurer, the overall resilience of the sector has grown considerably in recent years,” the S&P report said.

TOPICS
Catastrophe Natural Disasters Trends Carriers Hurricane Property Casualty