News Column

Fitch: Moderate El Nino & Softer Hurricane Outlook Cushion Already-Stable P/C Insurance

May 30, 2014



CHICAGO--(BUSINESS WIRE)-- Early forecasts for the 2014 hurricane season indicate that moderate El Nino conditions are likely to persist throughout the year, according to Fitch Ratings' annual Hurricane Outlook. This could inhibit tropical storm formation in the North Atlantic basin and decrease the probability of a major loss-inducing storm impacting the insurance industry.

Fitch estimates that given the current substantial level of industry capitalization, it would likely take a record individual storm loss or a series of significant losses equal to 15% or more of industry aggregate surplus for consideration of a property/casualty sector outlook movement to negative tied to catastrophe experience.

'From the perspective of the insurance industry, the intensity and location of storms making landfall are the most critical variables,' says Christopher Grimes, Director. 'While fewer and less severe storms bode well for the industry, the property/casualty segment remains positioned to withstand the impact of future significant events.'

The capital markets remain a strong and growing presence in the market for underwriting and offering protection from catastrophe risks. The continued low interest rate environment, along with the desire of (re)insurance companies to utilize alternatives to the traditional insurance risk transfer market, has generated significant growth in new capital from third-party investors. The process of insuring higher catastrophe-exposed areas, including Florida, continues to evolve as insurers of high-risk property expand their use of insurance linked securities (ILS).

This is the ninth edition of Fitch's annual hurricane season desk reference, providing analysis on the potential effects of a major storm season on large insurance companies and the industry as a whole. The report also compares forecasts for the 2014 hurricane season from several market experts, including National Oceanic and Atmospheric Administration (NOAA), Colorado State University (CSU) and Tropical Storm Research (TSR).

The full report, 'Hurricane Season 2014: A Desk Reference for Insurance Investors', is available at 'www.fitchratings.com' under 'Insurance' and 'Research'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Hurricane Season 2014 (A Desk Reference for Insurance Investors)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749119

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings, Inc.

Christopher A. Grimes, CFA, +1-312-368-3263

Director

Fitch Ratings, Inc.

70 W. Madison St.

Chicago, IL 60602

or

Brian C. Schneider, CPA, CPCU, ARe, +1-312-606-2321

Senior Director

or

Media Relations

Alyssa Castelli, +1-212-908-0540

alyssa.castelli@fitchratings.com

Source: Fitch Ratings


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