Hurricane Ophelia Adds To Insurers Woes
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To Nate, Maria, Harvey and Irma we now can add a potential new nasty, Ophelia as the 10th Hurricane of the US season - tying for the all time record set back in 1878!
Ophelia is way out in the mid Atlantic, southwest of the Azores according to the American authorities with maximum sustained winds of 120 kilometres an hour, which makes her a blowy little lass at this early stage (http://www.nhc.noaa.gov - there she is on this page - in the mid Atlantic and looking at a plentitude of targets as she bobs along at around 5 kph)
The current season ends on November 30, so there still is time for an 11th storm to form and set an all time new (how about the Yanks call it ’Tony’ for you know who?).
The NHC says that in terms of what it calls Accumulated Cyclone Energy (ACE), which measures the combined strength and duration of tropical storms and hurricanes, September was the most active month on record.
News of Ophelia’s debut will make the executive suites of insurers worldwide more jumpy now (especially QBE, the big Australian global insurer and reinsurer).
Harvey, Nate, Irma, Maria, Debbie (in Australia), floods in Peru, a big storm in northern Germany late last week, two quakes in Mexico, and the unknown bill from the terrible Californian fires will push the overall cost to them from insurance claims for 2017 to a new record of more than $US105 billion.
That was the previous record set for insurance losses in 2011 (when the total economic cost of disasters was more than $US380 billion and dominated by the NZ quake in Christchurch (the second in less than half a year), the Northeastern Japan quake, tsunami and then the Fukushima nuclear power station disaster (whose cost is being mostly absorbed -more than $US120 billion - by the government), as well as a category 5 cyclone (Yasi), floods and storms in and around central Queensland and the flooding in the Brisbane River Valley and then the city.
The Californian fires will be a multi-billion dollar damage bill with more than 1,500 homes and business destroyed (and 17 deaths and more than 150 people reported missing). Disasters in the US always cost more than in most other countries because the damage impinges on so many well-populated areas.
As we reported earlier in the week the impact on big insurance companies in the US, Europe and elsewhere (such as QBE) is mounting. For example, it will cost QBE over $US600 million in extra claim costs (that was before any impact from the Californian fires) and earlier this week big US insurer, AIG warned of a $US3 billion bill from the natural disasters - the three hurricanes (Irma, Harvey and Maria) and the two Mexican quakes.
News of a new storm and the damage toll from the fires leftQBE shares alone yesterday and they rose 0.6% to $10.31.
Overnight we had the first sign of an impact outside insurance with America’s biggest telco, AT&T downgrading 3rd quarter revenue earnings guidance and blaming it n storms and quakes.
AT&T said it expects the string of hurricanes in the US to reduce its third quarter revenues and earnings, while adding that the natural disasters, alongside increased competition, also saw it lose video subscribers.
The telco company said in a filing with the Securities and Exchange Commission that the hurricanes and earthquakes would combine to reduce revenues by nearly $US90 million in the third quarter and its pre-tax earnings by about $US210 million or 2 cents a share.
The natural disasters damaged AT&T’s network and other property in certain regions, and that alongside efforts to restore services and waived customer charges would hit its results.
The Texas-based company also expects further reductions in the current quarter as it continues to assess damage to its network.
AT&T also said that while expects to have added 300,000 subscribers to its DirectTV Now service — an “over-the-top” (OTT) video service that bypasses conventional cable or satellite distributors by delivering content over the internet, it lost about 90,000 US video subscribers in the third quarter. It said the loss was “driven by heightened competition in traditional pay TV markets and over-the-top services, hurricanes and our stricter credit standards”.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.