Loss estimates for Hurricane Sandy are still being calculated. However, if they fall in the range of the $5 billion to $10 billion, as catastrophe modeling firm EQECAT has estimated, the storm will probably not jeopardize capital for major property and casualty insurance or reinsurance companies, said Moody’s Investors Service analysts in a teleconference call today.
The rating agency said today that although losses will affect fourth quarter earnings, most of the major insurers will be able to take on the losses associated with Hurricane Sandy.
The companies with the most exposure are mainly property and casualty insurance companies. Moody’s analysts said that the losses are not likely to reach the reinsurance layer of coverage.
“The P&C industry as a whole is currently at a level of relative capital strength, with good risk-adjusted capitalization, moderate financial leverage, and earnings that have benefited from price increases and relatively low weather-related losses through the first three quarters of the year,” analysts said in a report published ahead of the teleconference today. “So despite the negative earnings impact of Hurricane Sandy, we expect that large diversified insurance carriers can absorb the negative impact with their capital strength intact. In addition, the event will likely help support price increases going into 2013.”
