The late April outbreak of severe storms in the US is unlikely to affect the international reinsurance market.
Speaking with Global Reinsurance, EQECAT’s senior vice president Tom Larsen said: “It’s not really an event for reinsurers. The way the market goes, the losses will be distributed over an enormous geographical area and an enormous number of companies.”
Larsen continued: “The typical mixture of types of losses includes one or two regional companies that will hit their reinsurance. Some companies will get a pinpoint hit in the heart of their company.”
Even with an estimated market loss around $5bn, Larsen said portfolio diversity will help reinsurers miss a bullet. “The bulk of the losses will go to the larger insurers that are geographically diverse so usually the losses will not hit the reinsurance industry because the insurers are so large.”
Latest insured loss estimates from catastrophe modeling firm AIR Worldwide place the damage bill between $3.7bn and $5.5bn.
The outbreak, which lasted from 22 April to 28 April, is the second deadliest severe thunderstorm outbreak in U.S. history, after the Tri-State tornado outbreak of 1925.