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 [4]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 [5] 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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