The U.S. property/casualty (P/C) industry took a beating from record first quarter 2011 catastrophe losses, and recent earnings announcements from global reinsurers illustrate the damage those losses did to earnings and operating results.
Insured losses from winter storms and severe thunderstorm and tornado events through April– including one outbreak that could represent the industry’s costliest ever — already are pressuring operating results just before what has been forecast to be an active Atlantic hurricane season.
How insurers manage catastrophe programs for the remainder of the year will be influenced by pricing and availability of property catastrophe coverage, as well as emerging views of loss exposure and whether the rising frequency and severity of storms seen in recent years is now the norm.
In a new report, A.M. Best Co. says that U.S. primary insurers could face higher reinsurance costs at the upcoming July 1 renewals, given first quarter 2011 catastrophe losses sustained by global reinsurers and the release of a new version of Risk Management Solutions Inc.¹s wind model, as companies evaluate the need for additional reinsurance protection.
Forecasters predict three to five intense hurricanes in the Atlantic basin, above the long-term average of two to three intense storms. One forecaster notes that the United States has not had a three year stretch without a hurricane landfall since the 1860s.
The report also notes that volatility in property lines related to above normal frequency and severity of thunderstorms, tornadoes and related events in recent years continues to pressure the financial results of regional insurers and single state writers concentrated in the affected states.