Reinsurance sector remains financially sound despite Hurricane Matthew

According to Standard & Poor's, the reinsurance industry had an excess capital of nearly 26 billion USD at the AAA level as at December 31, 2015.

The occurrence of Hurricane Matthew could not undermine the financial strength of the sector. A report published by the rating agency stated that this would be the case even if a more severe event than Hurricane Katrina occured over a 50-year period.

Under this assumption, the adjusted capital would be reduced by 7%. The impact on the combined ratio would then be of 13 points and the fall in pre-tax profits would reach 95%.

If Matthew were the most devastating loss over a 100-year period, the adjusted capital of reinsurers would fall by 10% while their combined ratio would be 19 points lower. Profits would then decline by an average of 136%.

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