Two major United States winter storms are expected to make the first quarter of 2026 an above-average catastrophe period, according to AM Best, although the ratings agency said most of the losses are likely to remain with primary insurers rather than reinsurers.

In a commentary released this week, AM Best said insured losses from Winter Storm Fern and Winter Storm Hernando would “carve into 1Q 2026 earnings”, but added that the industry should be able to manage the impact.

Flash estimates earlier this month from catastrophe modellers Karen Clark & Co and Verisk put insured losses from Winter Storm Fern at between $4 billion and nearly $7 billion. The storm swept across more than 30 states from January 23, bringing snow, ice and prolonged freezing temperatures.

Freeze-related damage, including burst pipes and power outages, was identified as the main driver of claims. Commercial properties are expected to account for a large share of losses because average claims tend to be higher and heating systems are often shut down outside business hours.

Losses were heaviest in southern and southeastern states such as Texas and Tennessee, where buildings and infrastructure are less adapted to extreme cold.

AM Best said preliminary estimates for Winter Storm Hernando were still being calculated, but the total was anticipated to be material for some insurers. Hernando, a historic "bomb cyclone" and nor'easter, struck the US East Coast from Maryland to Maine this week.

“More-effective enterprise risk management practices played a large role in the property/casualty industry’s resilience in 2025 despite the heavy first-quarter losses from the California wildfires and other weather events, and this should continue in 2026,” said Sridhar Manyem, associate director of industry research and analytics at AM Best.

The agency noted that although the first quarter would be above average for insured losses, it would not be as costly as the California wildfires of January 2025, which cost $10 billion for Bermuda carriers alone.

Importantly for Bermuda’s reinsurance market, AM Best said the storms are considered separate events and should largely be absorbed by primary carriers.

“As Winter Storms Fern and Hernando are considered separate and distinct events, each should be contained within the primary carriers; consequently, reinsurers will likely face lesser impacts,” said Helen Andersen, industry research analyst at AM Best.

While the latest storms are not expected to move the market on their own, they add to what remains an elevated loss environment, where Bermuda reinsurers underwrite a large share of US catastrophe risk. In recent years, global insured catastrophe losses have topped $100 billion annually.