Fitch Ratings has stated that it expects a limited amount of industry insured losses from Hurricane Gonzalo and Hurricane Ana, which threatened to produce extensive damage to Bermuda and Hawaii, respectively, but ultimately spared the islands from a significant hit.
While these events will add to insured losses for the year, overall industry catastrophe losses remain below average thus far in 2014.
As such, Fitch has said that it expects “soft market pricing conditions in property catastrophe reinsurance” to continue at the January 2015 renewals and beyond.
The agency cited “the absence of large losses since 2012, abundant capacity levels and sluggish demand from reinsurance buyers” as drivers behind the softening reinsurance market, characterised by falling prices and, less visibly, weakening terms and conditions.
This deteriorating reinsurance market environment led Fitch to assign a negative fundamental sector outlook to global reinsurance in January 2014.
Fitch estimated that it would likely take a major industry loss event “nearing $100 billion” to potentially result in a broad hardening of property and property catastrophe market prices.
Hurricane Gonzalo made landfall in Bermuda on 17 October, as a strong Category 2 hurricane. The very large and calm hurricane eye passed directly over the island, reducing the overall wind impact and mitigating the damage.
Bermuda's extensive hurricane preparedness and strict enforcement of its building codes, which are designed to withstand sustained wind speeds up to 110 mph and gusts up to 150 mph, helps the island to limit both its economic losses and loss of life compared with other hurricane-prone nations that are less developed.
Separately, Hurricane Ana intensified to become a Category 1 hurricane on 17 October, before passing southwest of the Hawaiian Islands.
