Catastrophes have wreaked havoc on P&C insurers’ Q2 earnings. Major losses from tornadoes, other bad weather and earthquakes have eliminated earnings for many, reports Keefe, Bruyette & Woods (KBW). The investment bank, which specializes in the financial services sector, is cutting estimates for a significant number of its insurers and reinsurers as losses mount from several tornadoes and other bad loss events.
Combined with RMS model changes, these loss events—including New Zealand and Japan earthquakes—are increasing awareness among underwriters of growing risk exposures. Most directly, the impact has been in the catastrophe and property reinsurance markets where rates at mid-year appear to be up in the 8% to 12% range. In other lines, particularly most casualty areas, downward pressures still persist as reported results remain stable, buoyed by ongoing reserve releases from the years 2003-2007. Partially offsetting pricing softness, KBW expects that year-over-year improvements in the economy could lead to top-line growth.
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