Preliminary estimates of the insured loss from Winter Storm Kyrill, which struck on January 18-19, average around EUR 5 bln. While losses to individual rated insurers and reinsurers should be manageable, the earnings of some reinsurers will be
meaningfully hit, says Moody’s Investors Service in a report.
The seven preliminary estimates published to date of the insured loss range EUR 2.5 – 8 bln, with the straight average standing at approximately EUR 5 bln. “Losses to individual rated insurers and reinsurers are expected to be manageable in the context of their capital strength and earnings capacity,” says Dominic Simpson, Moody’s Vice President and Senior Credit Officer. “However, we believe there will be a meaningful dent in the earnings of some reinsurers in particular.”
Although its wind intensity appears to have been less severe than that of Winter Storm Lothar in 1999, Kyrill is notable not only for the wide geographical area that it covered but also for its duration; some areas endured gales for more than 24 hours. As a result, Moody’s believes that frequency as opposed to severity will characterise claims emanating from Kyrill.
As with any storm event, it will take time for policyholders to submit their claims and for insurers to tally their losses. “While preliminary loss estimates need to be treated with caution, it is already clear that Kyrill is a material catastrophe event,” advises Simpson. “If the insured loss is indeed around EUR 5 bln, it would rank as the 12th costliest natural catastrophe since 1970.”
Moody’s believes that reinsurers will shoulder a significant proportion of the insured losses. With the insurance burden likely to be spread across many companies in different countries, it is the relatively limited number of reinsurers writing a meaningful amount of European — in particular German — business which are most likely to be affected by this storm event. Furthermore, Moody’s believes that the proportion of reinsured losses that is passed onto retrocessionaires is likely to be less than in previous years.
On January 18-19, strong winds produced by Winter Storm Kyrill hit a large number of European countries. Based on information published to date from a number of reinsurers and the major modelling firms,
