US Property-Casualty Insurers May Face Record First-Quarter Losses

RECORD BREAKING in red letters in a red rectangle

March 02, 2021

RECORD BREAKING in red letters in a red rectangle

US property-casualty insurers will likely face record first-quarter catastrophic losses as a result of extensive property damage from February's severe winter storms in Texas, Louisiana, and other southern states, according to Fitch Ratings.

The extreme cold temperatures and ice are leading to hundreds of thousands of claims for losses resulting from frozen or burst pipes, roof damage, power outages, and lost business income. Those claims will pressure near-term insurer results, Fitch said. But losses are likely to be largely concentrated within large homeowners insurance writers that have effective claims resources and are well-capitalized to absorb short-term volatility from major catastrophic events, the rating agency said.

Catastrophe losses resulting from the winter storms in the southern states are likely emerge from homeowners and auto business, as well as various commercial coverages, according to Fitch, with the widespread scale of the event and the associated claims volume possibly driving insured losses ranging from $10 billion to $20 billion. In comparison, US industry first-quarter catastrophe losses have averaged $4.6 billion over the past 10 years, with a high of $7.6 billion in 2017.

Given the wide geographic spread of the event, a large number of insurers will likely be exposed to winter storm losses, Fitch said. Insured losses in Texas will likely be greater in the homeowners and, to a lesser extent, personal auto lines than in commercial lines, the rating agency said.

March 02, 2021