Hurricane Ian may whip up reinsurance pricing hopes through 1.1 renewals

Hurricane Ian may do its worst on Florida property, but at the same time offer a handy boost to reinsurer pricing expectations going into the year-end reinsurance renewals seasons, a fast-rising consensus amongst leading equity brokerage analysts suggests.

“We see Hurricane Ian as an incremental boost to reinsurance pricing momentum,” analysts at Morgan Stanley said in a note to investors.

“Catalysts for this hardening already include tighter capacity, increasing loss costs, and unabated inflationary trends, now further supported by a major industry loss event,” Morgan Stanley said. “Bodes well for reinsurers going into 1/1 renewals.”

Analysts at Berenberg concur that events “will further add to the pricing rhetoric,” but they are also advising investors and the industry to remain cautious in early reinsurer loss estimates from Ian.

Too much of the reinsurance world has been shifting its coverage vis-à-vis property cat, and Florida in particular, for anyone to have a clean view to the pending reinsurance price tag amongst major players. Where reinsurers aren’t cutting exposure outright, they have been altering structures and terms to an extent that makes most projections quite tentative, Berenberg noted.

Wells Fargo dipped into the forecaster lot. At total insured losses of $30 billion, Wells Fargo expects Allstate and Progressive would tap their reinsurance programmes and Chubb could get into its $1 billion per-occurrence retention threshold, analysts wrote in a note to markets.

But Wells Fargo likes the potential shake-down for reinsurers willing to venture towards the Florida market. Wells likes RenaissanceRe and Arch Capital as “best positioned to take advantage of the market improvement post-event.”

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