Reinsurance/natural disasters: secondary perils are ready for prime time
Batten down the hatches. Despite the hurricane season getting off to a slow start, there is a 60 per cent chance of an above-normal Atlantic hurricane season this year, according to the US National Oceanic and Atmospheric Administration.
This June to November period causes jitters with reinsurers and their investors. Shares typically underperform in the spring and summer, picking up in the autumn when the likely earnings impact from the US hurricane season is clearer.
Reinsurers can take the strain. Munich Re has historically taken the highest share — 3.4 per cent — of the insurance industry’s hurricane losses, says Berenberg. But its balance sheet shows it can cope. In the worst-case scenario, its excess capital of $16.2bn would only be cut by a third, say the analysts.
This story originally appeared on: Financial Times - Author:Faqs of Insurances
