Winter storm stands to hit reinsurers hard.
Kyrill will cost the insurance industry about €5bn, Moody's has estimated, with reinsurers taking a significant hit.
The ratings agency has issued a report on the mid-January winter storm entitled "Winter Storm Kyrill Poised to Primarily Impact Reinsurers' Earnings, But Not Ratings".
The report indicates that the seven preliminary estimates published to date of the insured loss range from €2.5bn to €8bn.
Dominic Simpson, Moody's vice president and senior credit officer, said: "Losses to individual rated insurers and reinsurers are expected to be manageable in the context of their capital strength and earnings capacity. However, we believe there will be a meaningful dent in the earnings of some reinsurers in particular."
Although its wind intensity appears to have been less severe than that of Winter Storm Lothar in 1999, Kyrill is notable not only for the wide geographical area that it covered but also for its duration; some areas endured gales for more than 24 hours. As a result, Moody's believes that frequency as opposed to severity will characterise claims emanating from Kyrill.
Simpson added: While preliminary loss estimates need to be treated with caution, it is already clear that Kyrill is a material catastrophe event. If the insured loss is indeed around EUR5 billion, it would rank as the twelfth costliest natural catastrophe since 1970."
Moody's believes that reinsurers will shoulder a significant proportion of the insured losses. With the insurance burden likely to be spread across many companies in different countries, it is the relatively limited number of reinsurers writing a meaningful amount of European - in particular German - business which are most likely to be affected by this storm event. Furthermore, Moody's believes that the proportion of reinsured losses that is passed onto retrocessionaires is likely to be less than in previous years.
