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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 16, 2017 01:40 PM (EDT)
A.M. Best has reviewed preliminary loss data received from rated insurers in the Caribbean and Puerto Rico impacted by Hurricanes Maria and Irma, and at this time, does not anticipate any Credit Rating (rating) actions.
A Best’s Briefing released just before Hurricane Maria struck Puerto Rico, titled, “Hurricane Maria Could Test Financial Strength of Caribbean/Puerto Rican Insurers,” raised potential concerns for insurers in the Caribbean and Puerto Rico as the region prepared to experience its second major hurricane in two weeks. Hurricane Maria turned out to be the largest hurricane event in the U.S. territories’ history, with modeled insured loss estimates ranging from $15 billion to $85 billion. These loss estimates includes wind, storm surge and flood damages in the United States and the Caribbean, with the majority of losses coming from Puerto Rico.
A.M. Best currently assigns ratings to a number of local insurers writing business in Puerto Rico and the Caribbean. Based on the preliminary loss information, it appears that loss estimates from Hurricane Maria, albeit large, have not breached the insurance companies’ net catastrophe reinsurance limits. Furthermore, loss estimates likely are to remain within each company’s reinsurance coverage limits and net risk tolerance. Local insurers operating in Puerto Rico and the Caribbean generally retain very modest property retentions due to modest risk appetite for property exposure. Therefore, these insurers make extensive use of quota share reinsurance and catastrophe reinsurance, which over the years has served them well.
While A.M. Best does not anticipate any rating actions at this time, some concerns remain regarding liquidity, as most of these companies look to their reinsurers to provide the funds to pay claims. In some cases, advances via reinsurance cash calls have been utilized. In addition, significant challenges remain regarding the territories’ infrastructure, which could pressure or delay the claims settlement process and add potential uncertainty regarding companies’ strategic plans. A.M. Best will continue to monitor the market and its impact on rated entities.
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