The U.S. reinsurance markets have sufficient capacity available to meet the demand for coverage that is expected in the upcoming hurricane season, according to Fitch Ratings’ annual report “Hurricane Season 2012: A Desk Reference for Insurance Investors.”
Early forecasts for the 2012 U.S. hurricane season predict that the North Atlantic basin will likely produce below-average hurricane frequency relative to long-term results, according to Fitch, as a number of environmental forces that serve to stifle the development of tropical storm activity appear more prevalent at this point in 2012 than in recent years.
Fitch said many homeowners insurance companies and commercial property insurers and global reinsurers reported declines in statutory surplus and shareholders’ equity in 2011 due to high catastrophe losses, yet sufficient underwriting capacity remains available in the reinsurance markets.
“The proliferation of catastrophe events in 2011, both international and domestic, have been a catalyst for positive pricing movement in the U.S. property insurance market, specifically in regions and lines of business with significant catastrophe exposure,” according to the report.
Traditional insurance coverage is also supplemented by reinsurance-linked securitizations which accelerated in 2012 from the largest amount of catastrophe bond issuance ($1.5 billion) of any first quarter in history.
Fitch said the U.S. property reinsurance segment experienced significant price improvement in recent quarters, along with continued integration of Risk Management Solutions’ version 11.0 hurricane model update. Each factor has served as a catalyst for positive pricing movement in the U.S. property insurance market.
This is the seventh edition of Fitch’s annual hurricane season desk reference, providing geographic market share analysis to estimate the potential effects of a major storm in different areas on large insurance companies and the industry as a whole. The report provides market share information listing the top 10 insurers by direct written premium for 18 coastal states in both personal and commercial property insurance.
The report also compares forecasts for the 2012 hurricane season with the National Oceanic and Atmospheric Administration, Colorado State University, Tropical Storm Research, Accuweather.com and WSI Corporation.
