INSURERS WILL HANDLE SOFTER ATLANTIC STORM SEASON: FITCH

The 2014 Atlantic basin hurricane season that started June 1 is likely to be less active than normal owing to the development of an El Niño conditions in the Pacific and the p/c insurance industry should be able to withstand the storms that do develop, according to Fitch Ratings’ report, “Hurricane Season 2014: A Desk Reference for Insurance Investors”. Given the current level of industry capitalization, a change in the sector’s outlook to negative would require a record individual storm loss or a series of significant losses equal to 15% or more of industry aggregate surplus, Fitch said. “While fewer and less severe storms bode well for the industry, the p/c segment remains positioned to withstand the impact of future significant events”, said Fitch director Christopher Grimes. Fitch also notes that capital markets “remain a strong and growing presence” in the market for underwriting catastrophe risks owing to the low interest rate environment and companies’ desire to use alternatives to traditional reinsurance. The report, Fitch’s ninth annual preview to the June-through-November hurricane season, includes the latest storm-season forecasts from the National Oceanic and Atmospheric Administration, Colorado State University and Tropical Storm Research. All expect below-normal storm activity owing to El Niño, which causes wind shear and stronger trade winds in the Atlantic that disrupt development of cyclonic formation of weather systems coming off of Africa.