Alternative capital lost roughly the same amount as traditional reinsurers from a series of third-quarter catastrophes.

That is the view of ratings agency AM Best, whose own surveys indicate that reinsurers are facing net catastrophe losses totalling $20 billion to $25 billion.

Primary insurers are dealing with a roughly $45 billion bill, Best estimates, leaving about $20 billion to $25 billion for alternative capital vehicles such as catastrophe bonds and sidecars to pick up.

The ratings agency is estimating that hurricanes Harvey, Irma and Maria, plus the central Mexico earthquake, generated a total of $90 billion in industry losses.

If the estimates prove accurate, then a quarter or more of the $90 billion alternative capital element in the reinsurance industry will be wiped out.

However, with much uncertainty over losses remaining, AM Best cautioned: “Given the complexity of the hurricane events, it would not be surprising to see losses develop well into next year.”

The rating agency expects the global reinsurance industry to record its first full-year underwriting loss since 2011 and a return on equity of between zero and minus 5 per cent.

“In some respects this is a dreaded scenario, where losses are significant to drag earnings but not significant to meaningfully change market dynamics and pricing for a sustained period of time,” Best said.

“What’s different with these particular hurricane events, however, is the material participation by alternative capital and the unique features of that capacity. The response from this capacity will have a definite effect on the dynamics of the market, both near and long term.”

Hiscox CEO Bronek Masojada has argued that alternative capital replenishment will be “a trickle” rather than a flood and says reinsurance rates are already rising.

Validus CEO Ed Noonan has argued that ILS investors are not naive and will commit their capital for 2018 with the expectation of higher returns.