Severe winter negative for property and casualty insurers: Fitch

Fitch Ratings reports that no rating impact is expected as a result, but large losses early in 2014 related to severe winter weather in the United States is damaging the results of property and casualty insurance companies.

Citing estimates from the Insurance Information Institute, Fitch noted in a statement Monday that severe winter weather from Jan.1 to Feb. 21 generated the fifth costliest year in the last 34 for insured losses. Losses were estimated at $1.5 billion from approximately 175,000 claims.

Most claims experience is derived from the upper Midwest and New England regions, although record cold temperatures in many regions and widespread snowfall have expanded the scope of weather-related losses this season, the statement notes. Insurers will need some time to completely tally the losses from the prolonged period of heavy snow and extreme cold.

Fitch notes that some estimates, however, have been released. For example, Allstate announced an estimated US$277 million in pre-tax losses related to catastrophes for January 2014, while Chubb reported a preliminary estimate of US$150 million to US$200 million of pre-tax losses from two events in early January.

The weather will also likely impact the overall economy, particularly in the form of consumption measures, Fitch adds. It cites comments from the chief economist at the Bank of Tokyo-Mitsubishi, who estimates the winter weather could impact first quarter gross domestic product by half a percentage point.