Reinsurers are strong enough to withstand losses from Hurricane Michael and the event is unlikely to be big enough to move the market.

That is the view of three rating agencies which commented after the Category 4 storm hit the Florida panhandle area yesterday.

Catastrophe modelling firm Corelogic estimated that insured losses from wind and storm surge damage was likely to range between $2 billion and $4.5 billion.

Last night, however, another modelling firm, Karen Clark & Co, estimated a loss of close to $8 billion, adding that nearly a half of those losses were suffered in two Florida counties, Bay and Gulf.

Bermuda is a hub for the property-catastrophe reinsurance and catastrophe bond industry and Florida is the world’s largest market for such coverage.

Michael has struck just as reinsurers are preparing to announce their third-quarter results, which will be impacted by estimated losses related to Hurricane Florence, which caused devastation in the Carolinas last month.

Standard & Poor’s did not expect Michael to cause too much strain for the well-capitalised industry.

“We expect the hurricane to be an earnings event for the US primary insurance and global reinsurance sectors,” S&P stated.

“Although the third quarter of 2018 has seen various catastrophes, we believe that the combined earnings for the US insurance and the global reinsurance sectors will absorb the total year-to-date catastrophe losses, including those from Hurricane Michael.”

S&P added that reinsurers were unlikely to see big price increases when renewal of reinsurance contracts comes around.

“It’s too early to quantify the January 2019 reinsurance pricing renewals, but if 2017 is any indication, year-to-date catastrophes will not likely change the fizzling of the reinsurance pricing momentum the industry saw earlier this year,” S&P stated.

“However, Hurricane Michael may provide some support for rate increases demanded by primary insurers.”

AM Best said insurers, reinsurers and insurance-linked securities investors could face significant losses.

“Depending on the storm’s intensity after making landfall, the potential for insurable losses could put some pressure on reinsurers,” AM Best stated.

“The actual impact of the hurricane will depend on a number of yet undetermined factors, but AM Best believes that most of the affected rated carriers have sufficient capital and appropriate reinsurance programmes to withstand this event effectively.”

Florence, a slow-moving storm that generated record-breaking rainfall in North Carolina, came with widespread flood damage, but Moody’s made the point that this was unlikely to be the case with Michael.

“Because the storm is moving fast, we expect the largest effects will be from wind damage and storm surge, rather than flooding,” Moody’s stated.

“The maximum rainfall forecast is about one foot, reducing the likelihood that flooding will be a large driver of losses, according to catastrophe modelling firm RMS.”

Moody’s added: “Reinsurers with an outsize concentration in Florida will be more vulnerable than those with globally diversified catastrophe exposures.”