A wide rage of insurers and reinsurers are expected to be impacted by Hurricane Isaias, which made landfall as a Category 2 storm in the Florida Panhandle on October 9th, but while the event is expected to drive moderate economic and insured losses, Fitch says it is “not likely to affect credit for rated property/casualty (P/C) (re)insurers.”
Hurricane Isaias peaked as a Category 3 major hurricane over the Gulf before increasing wind shear weakened it on approach, eventually making landfall as a Category 2 storm with maximum sustained winds of 105 mph, although has now been downgraded to a tropical storm.
In affected areas like Florida, Alabama, Georgia, and The Carolinas, Fitch expects the storm to result in moderate economic and insured losses, estimating that industry losses could reach the mid-single-digit billions of dollars.
The rating agency believes that the storm will be a fourth quarter and 2026 earnings event for large, rated re/insurers with Gulf exposure, but does not expect it to impact credit for these companies.
“The storm’s reduced intensity at landfall is expected to result in more manageable insured losses,” says Fitch.
Earlier today, we reported that Cotality, a global provider of property information, analytics, and technology-enabled data solutions, estimated insured losses from Isaias’ wind and storm surge at USD 2 billion to USD 3 billion, as Moody’s warned of an estimated USD 1-2 billion in lost economic output.
Fitch highlights the fact Florida specialist homeowners’ carriers manage concentrated risk by ceding a significant share of exposure to third-party reinsurance companies, while the majority of large national insurers have limited market share in Florida, and have also cut policies in-force through non-renewals as they seek to manage balance sheet exposure and reinsurance costs.
However, national primary insurers are expected to retain a more meaningful share of wind-driven losses in Alabama and other states impacted by the storm, reflecting less reinsurance utilisation when compared with Florida.
“The U.S. coastal property market has not experienced a hurricane landfall since Hurricane Milton in October 2024, allowing insurers to retain earnings and strengthen surplus, supporting continued market stabilization,” explains Fitch.
As Fitch highlights, Florida’s property market has shown signs of stabilisation since the important insurance and tort reforms in 2022 and 2023, which targeted costly litigation practices and eventually encouraged insurers and reinsurers to increase their participation in the state.
“The Florida market response to Milton suggests the reforms may have contributed to improved insurer stability and capacity, particularly because the storm’s ultimate insured losses were manageable relative to initial estimates, with no material adverse reserve development reported from the storm in subsequent periods,” says Fitch.
However, when it comes to Florida insurance specialists unrated by Fitch, which includes newer market players that have accumulated capital amid improved operating conditions, but which remain relatively untested by a major catastrophe event, the rating agency warns of potential vulnerabilities to large events that produce losses exceeding their reinsurance limits.
“Fitch does not expect Isaias’ losses to exhaust catastrophe reinsurance protection for most Florida specialists; however, individual insurers with unique risk concentrations may report higher-than-expected gross losses,” says Fitch.
In terms of Citizens, the state’s insurer of last resort, Fitch says that its reduced policy count, which has been coming down since the reforms, “should lower its exposure to a new hurricane event by decreasing the amount of insured property risk concentrated in its portfolio, lowering the likelihood that a single catastrophe would generate losses large enough to pressure its surplus and reinsurance program.”
The post Mid-single-digit billions of dollars loss from Isaias unlikely to affect P&C re/insurer credit profiles, says Fitch appeared first on ReinsuranceNe.ws.
