A.M. Best Comments on Potential Impact of Hurricane Wilma on the Property/Casualty Insurance Industry.OLDWICK, N.J. -- With Hurricane Wilma Hurricane Wilma was the most intense hurricane ever recorded in the Atlantic basin. Exceeding the 21 storms of the 1933 season, Wilma was the twenty-second storm (including the subtropical storm discovered in reanalysis), thirteenth hurricane, sixth major hurricane, and fourth making landfall land·fall n. 1. The act or an instance of sighting or reaching land after a voyage or flight. 2. The land sighted or reached after a voyage or flight. in Southern Florida, A.M. Best Co. has begun to assess the potential financial impact an event of this magnitude may have on the property/casualty and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. industry. A.M. Best's initial focus will be on those rated organizations with the largest market share exposure relative to surplus. In addition, those companies that sustained losses associated from Hurricanes Katrina and Rita, particularly within the reinsurance segment and national primary insurers, will also be considered for a priority review. While awaiting information from the affected entities, A.M. Best is evaluating potential market share exposure based on a number of different industry loss scenarios. In addition, A.M. Best's analysts will review each organization's overall reinsurance protection relative to the market share and modeled results. Further, the analysis will include details regarding each company's model assumptions, particularly as they relate to demand surge. Lastly, A.M. Best will evaluate each organization's financial flexibility post-event, as those with strong flexibility will be able to more quickly replace depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d capital. In comparison to Hurricanes Katrina and Rita, the Florida Hurricane Catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). Fund (FHCF FHCF Florida Hurricane Catastrophe Fund FHCF Flying Horse Cracking Force (hacking) ) will provide the private insurance sector with reinsurance coverage, depending on the magnitude of Hurricane Wilma. The FHCF provides coverage for the 2005 hurricane season Hurricane season refers to a period in a year when hurricanes usually form. For more information see: Tropical cyclone#Times of formation. For a lists of past seasons, see:
Given the considerable volume of claims associated with Hurricanes Katrina and Rita, A.M. Best believes a number of companies' claims operations may be stressed, leading to greater risk of errors, bad faith claims and undetected fraud. Further, there are a number of companies operating in the Florida property market that are not engaged in A.M. Best's interactive rating process and, therefore, are not rated by A.M. Best. While A.M. Best does not assign a formal rating opinion to these entities, A.M. Bests believes their ability to meet policyholder Policyholder An individual who owns an insurance policy. obligations may be stressed given their geographic concentration in South Florida. This risk is increased given the significant losses sustained by the Florida market in 2004. A.M. Best will continue to evaluate the potential and actual impact of Hurricane Wilma as more detailed information becomes available. While A.M. Best realizes that actual loss estimates will take time to accumulate Accumulate Broker/analyst recommendation that could mean slightly different things depending on the broker/analyst. In general, it means to increase the number of shares of a particular security over the near term, but not to liquidate other parts of the portfolio to buy a security , it is expected that all rated companies will provide preliminary modeled loss estimates and/or ranges within a reasonable time frame. Given the significant industry losses already sustained from 2005 hurricane activity and the path of Hurricane Wilma across the state of Florida, there is increased likelihood of rating downgrades or negative revisions to insurers rating outlooks. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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