Investors expect worse losses than Hurricanes Harvey, Irma and Maria
As Hurricane Maria follows a similar path as Hurricane Irma that hit Florida on Sept. 10, investors are discounting book value hits on property/casualty stocks that are worse than the losses so far seen in the hurricane season, Credit Suisse said in a Sept. 18 analyst report.
Hurricane Maria strengthened to a Category 4 and is to make landfall on the Leeward Islands, following a similar path as Irma.
The fact that investors are discounting more losses than so far seen may make sense as “we are only half way through an active hurricane season,” the analysts noted.
For both the primary and the reinsurers, there is also the reality that the “next” hit poses more potential balance sheet risk (all things being equal) than the last because in some cases reinsurance layers may have been depleted.
“We think that preannouncements have thus far pointed to upside in industry loss estimates for Hurricane Harvey and downside to loss estimates from Hurricane Irma,” the analysts noted.
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