The U.S. property/casualty insurance industry encountered deja vu in this past year, reported Fitch Ratings in its annual 2005 Review and 2006 Outlook for the U.S. insurance industry. The ratings agency says 2005 mirrored 2004 in some respects with a strong first half operating performance that was then dampened considerably by third-quarter catastrophe losses although catastrophe losses in 2005 were much more severe. Fitch said the industry will not reproduce the underwriting profits that were reported in 2004.
A record number of named Atlantic tropical storms formed in 2005. The strongest of which, Hurricane Katrina, produced the largest insured loss on record for one event. Katrina’s destructive path in Louisiana and Mississippi was followed by Hurricanes Rita and Wilma, which each produced substantial insured losses that, combined, will make 2005 the most devastating year ever for insured catastrophe losses by a large measure.
“These events increasingly point to potential annual hurricane frequency and severity that is greater than previously considered,” said James Auden, senior director, Fitch Ratings. “The losses produced by these catastrophes also demonstrated that a number of individual reinsurers were not managing their aggregate exposures relative to capital as tightly as previously assumed, leading to several recent rating downgrades.”
The annual report encompasses four separate reports on the Property & Casualty, Life, Title, and the Health and Managed Care business lines and is on www.fitchratings.com.
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