Hurricane Florence will be an earnings rather than a capital event for the reinsurance industry, according to ratings agency S&P Global Ratings.

Meteorologists today forecast that the Category 2 storm would make landfall in North and South Carolina tomorrow.

In a bulletin, S&P said previous storm experience pointed to potential insured losses of between $8 billion and $20 billion.

“Wind-related damage and the associated storm surge are likely to be major causes of insured losses,” S&P said.

“A majority of the insured losses will likely end up with the insurance sector rather than reinsurance, given the amount of losses and prominence of national insurers in North and South Carolina and in Georgia that generally tend to retain a higher level of catastrophe losses.”

It added the that the US government backed National Flood Insurance Programme could take a hit from inland flooding caused by the slow-moving storm.

“For losses in the range of $8 billion to $20 billion, we believe Florence will be an earnings event and not a capital event, as the combined earnings for US insurance and the global reinsurance sectors will be sufficient to absorb the total year-to-date natural catastrophe losses. Therefore, we expect minimal rating actions, if any.”

Last year, Bermudian reinsurers shouldered heavy catastrophe losses from three major hurricanes, Harvey, Irma and Maria, which hit the US and the Caribbean, and from earthquakes and wildfires.

“If the rest of 2018 has as many natural catastrophes as 2017 had, re/insurers will definitely feel the pain, albeit to varying degrees,” said S&P Global Ratings credit analyst Hardeep Manku.

Tom Sabbatelli, event response manager for catastrophe modelling firm RMS, also issued an update this afternoon.

“The storm is now much broader due to its weakening via wind shear,” Mr Sabbatelli said. “We may be facing a situation where hurricane-force winds are weaker than anticipated but perhaps impacting a slightly broader region than once thought.

“The broadening of the event also signals that storm surge and flooding will remain important drivers of overall loss. It’s important to note this hurricane will likely not make landfall as a major hurricane [that is, a hurricane of Category 3 or above].”