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Siddiqui noted that a $100 billion event today is not what it once was, as much of those losses are no longer sitting with reinsurers.<\/p>\nIn an interview with Reinsurance News during the 2025 RVS in Monte Carlo, Salman Siddiqui, Associate Managing Director at Moody\u2019s Ratings, and James Eck, Vice President\u2013Senior Credit Officer at Moody\u2019s Investors Service, explained that while a single $100 billion catastrophe loss event in the past would have eroded balance sheets, today it could instead be an earnings event.<\/p>\n
Siddiqui noted that a $100 billion event today is not what it once was, as much of those losses are no longer sitting with reinsurers.<\/p>\n
\u201cThey\u2019re being taken by ILS, cat bonds, sidecars, all sorts of stuff, going straight into the capital markets,\u201d he said. \u201cSo that $100 billion event, which in the past would have eroded balance sheets, today could be \u2014 could be \u2014 an earnings event.\u201d<\/p>\n
He added that, based on modelling by Moody\u2019s Insurance Solutions, if Hurricane Andrew were to occur today, insured losses would likely exceed $100 billion. Such an event, he said, would tighten market conditions and likely trigger a return to a hard market.<\/p>\n
Siddiqui said, \u201cWe would see tightening, but more importantly, it would give a return to a hard market, because we have to remember rates are actually still quite high. And it might be that we see rates increasing in the top layers, whereas the middle layers may continue to stay where they are. I think a lot of the softening that we\u2019ve seen is probably in the top layers so far \u2014 those risk-remote layers \u2014 so I think that might go back up.\u201d<\/p>\n
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<\/a><\/div>\n<\/div>\nEck highlighted that there have been over $100 billion in natural catastrophe losses annually for five consecutive years.<\/p>\n
He said, \u201cIt seems like companies have been able to navigate fairly well, just in terms of where pricing has gone and what the attachment points are \u2014 pushing a lot of that loss to the primary companies.<\/p>\n
\u201cBut when you do have those big tail hurricane events, there\u2019s going to be a higher proportion going to the reinsurance market, which would then flow back into ILS and retro. It\u2019s hard to say, but there\u2019s a lot of capital.<\/p>\n
\u201cA lot of them also have primary businesses and other things that they do. Having that diversification is certainly helpful.\u201d<\/p>\n
During the interview, they also spoke about Moody\u2019s recent outlook revision on the global reinsurance sector to stable from positive, explaining why it changed and what factors could shift it back to positive \u2014 or to negative.<\/p>\n
Siddiqui explained, \u201cWe had a positive outlook on reinsurance last year and that was driven by the fact that we had upward momentum on property cat rates. We had seen year-over-year increases, and now we\u2019re in this period of a softening market. So rates are coming off between five and 10%, but although that\u2019s coming down a little bit, our view is that rates are still very adequate. There\u2019s still a lot of margin available for reinsurers to earn out, and we think that will remain the case for 2025 and 2026. Whilst there is some decline in property prices, casualty prices continue to strengthen and firm up, although adequacy of those prices is uncertain. So although those prices have gone up quite a bit, it\u2019s still hard to say whether they are sufficient, given the latency issue.<\/p>\n
\u201cOther things supporting our view on the stable outlook are interest rates and investment income \u2014 those are still very, very supportive. So companies\u2019 earnings are considerably supported by investment income. And then, last of course, as a rating agency, is capital.\u201d<\/p>\n
In terms of what could shift the outlook back to positive, Siddiqui said that in the first place, a positive outlook from Moody\u2019s is very rare, with last year being the first time in 15 years that the agency had one for the sector.<\/p>\n
\u201cYou need a confluence of everything going right and no dark clouds. So I think the main issue is the softening market. And if we have a really large loss, it will have to be a material loss \u2014 I wouldn\u2019t put a number on it \u2014 but something really high to have rates go back up,\u201d he said.<\/p>\n
Eck continued, \u201cIt seemed like the California fires had no impact. I thought that combined with the hurricanes last year would have provided more support, maybe it provided some, but it still came down.\u201d<\/p>\n
On the other hand, regarding a change in outlook to negative, they said they are mostly watching attachment points and terms and conditions.<\/p>\n
Siddiqui stated, \u201cI think if we start seeing erosion in terms and conditions and a lowering of attachment points, that is when you start getting more concerned, because that\u2019s when we would be back to the bad old days, with reinsurance companies providing earnings coverage beyond, say, balance sheet coverage. We\u2019re nowhere near that. Certainly the conversations we\u2019ve been having at this conference, and in the time preceding this, suggest the reinsurance market is disciplined and holding the line on attachment points and terms and conditions. But I think if those start to erode, interest rates decline, and competition intensifies, then we would go negative.\u201d<\/p>\n
The post Moody\u2019s says a $100bn single cat could be an earnings event: Siddiqui & Eck<\/a> appeared first on ReinsuranceNe.ws<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" In an interview with Reinsurance News during the 2025 RVS in Monte Carlo, Salman Siddiqui, Associate Managing Director at Moody\u2019s Ratings, and James Eck, Vice President\u2013Senior Credit Officer at Moody\u2019s Investors Service, explained that while a single $100 billion catastrophe…<\/p>\n","protected":false},"author":1,"featured_media":563,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[11],"tags":[],"_links":{"self":[{"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/posts\/561"}],"collection":[{"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/comments?post=561"}],"version-history":[{"count":3,"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/posts\/561\/revisions"}],"predecessor-version":[{"id":565,"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/posts\/561\/revisions\/565"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/media\/563"}],"wp:attachment":[{"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/media?parent=561"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/categories?post=561"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/tags?post=561"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}