View this article online: https://www.insurancejournal.com/news/southeast/2016/10/09/428820.htm
On Friday, a catastrophe modeling firm slashed its estimate for insurance losses from Hurricane Matthew on Friday, as the storm skirted Florida but failed to make landfall.
Kinetic Analysis had estimated the insured losses on Thursday at $25 billion, but cut its forecast to $4 billion on Friday morning, a spokesman told Reuters by telephone.
Matthew has been threatening the first direct hit on the United States in more than a decade, and was shaping up to be the second costliest U.S. hurricane on record for insurers, according to initial industry estimates.
But industry participants said the insurance impact remained hard to gauge.
“People are looking at this literally every minute and working overnight on it,” one trader said.
Hurricane Matthew killed more than 800 people and left tens of thousands homeless in its rampage through Haiti, the poorest country in the Americas, earlier this week before lashing Florida with high winds on Friday and rolling northward up the U.S. Atlantic coast.
“Based on the storm’s current trajectory and strength, the catastrophic impact from Matthew appears to be less than feared 24 hours ago and we would begin to buy P&C (property & casualty) insurers on the back of yesterday’s sell-off,” JP Morgan analysts said in a client note.
A $25 billion loss would have made Matthew the second most costly hurricane in U.S. history behind Katrina in 2005, JP Morgan’s analysts wrote late Thursday.
Other estimates had come in at losses of $20-30 billion.
The ratings agency Fitch said on Friday that Hurricane Matthew was not likely to present a major capital challenge to insurance underwriters in Florida and other southeastern U.S. states.
Shares in Heritage Insurance Holdings bounced after it gave a preliminary estimate on Friday of a loss of $500 million from the hurricane, “well within” its $1.9 billion catastrophe reinsurance cover.
The financial information firm S&P Global said late on Thursday that the hurricane represented a “real test” of reinsurers’ exposure, but that it was unlikely to affect their ratings due to the reinsurers’ strong capital buffers. ($1 = 0.8093 pounds)
(Additional reporting by Jonathan Gould; Editing by Simon Jessop and Mark Potter)
Related: