Third party capital is not spooked by storms—yet, says Flandro
Providers of alternative capacity to the risk transfer business will not be spooked by the series of hurricanes that have hit the US, despite the high losses and the fact that the trajectory of the storms was unusual, David Flandro, global head of analytics JLT Re, told Monte Carlo Today.
He said that the hurricanes have again proved how difficult it is to predict and model such events and they will make the entire industry sit up and take notice of just how severe events can be. But this will not deter investors from the sector.
“Nothing we have seen so far, even given the unusual track of the hurricanes, is outside the expected modelled outputs they use; they are relatively normal in a purely statistical sense,” Flandro said.
“As such, we have not seen third party capital sit up and pause at what is going on. What is more, if rates do increase, third party capital will quickly reload—even if some of their previous investments have triggered.”
He said he believes that losses from the storms will shore up the softening market but they will not change the pricing or behaviour of the industry markedly—yet.
“That said, we are still early in the hurricane season,” he said. Other storms including Jose and Katia, which have already formed, could cause further losses and potentially influence the direction of the market, he concluded.
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