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Hurricane Matthew damage manageable: AM Best

Insurers affected by Hurricane Matthew mostly have the capital levels and reinsurance programs to absorb losses, according to ratings agency AM Best.

Larger insurers with diverse geographic footprints and product profiles may see an impact on fourth-quarter earnings but are unlikely to take a hit to overall balance sheet strength, it says.

Smaller, more highly exposed property insurers will likely take longer to determine losses, and it is possible the impact may affect earnings and capitalisation.

“Regardless of the size of the carrier, reinsurance coverage and risk concentration parameters will have a material influence on mitigating the impact of the hurricane losses,” AM Best says.

“Initial indications suggest total losses will be within established catastrophe reinsurance limits for AM Best-rated entities.”

Matthew left a trail of wind and flood damage across US coastal communities from central Florida to Virginia earlier this month.

“While the predominantly seabound path of the hurricane proved fortunate because loss estimates are lower than initially feared, newer start-up companies, such as in Florida, remain fairly untested regarding risk management and reinsurance coverage,” AM Best says.

Modeller AIR Worldwide has estimated insured losses from the hurricane at up to $US8.8 billion ($14.1 billion), mostly borne by US insurers.

Matthew followed hot on the heels of Hermine, which was the first hurricane to make landfall in Florida since Wilma in 2005.