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Environment

Hurricane Dorian could cost insurers $25 billion: UBS

Strong winds batter Oceanhill Boulevard in Freeport, as Hurricane Dorian passes over Grand Bahama Island, Bahamas September 2, 2019 in this still image taken from a video by social media. Lou Carroll via REUTERS

(Reuters) - Hurricane Dorian, which battered the Bahamas early on Monday, could cause insurance industry losses of up to $25 billion, according to analysts at UBS.

Dorian, the second-strongest Atlantic storm on record, was forecast to pound the archipelago through the day, then move slowly toward the east U.S. coast, where authorities ordered more than a million people evacuated in Florida, South Carolina and Georgia.

UBS analysts updated their model to reflect a wider potential industry insured loss range of $5 billion to $40 billion and raised their base case to $25 billion from $15 billion, with solvency capital at risk.

The analysts estimate about $70 billion of natural catastrophe losses for 2019 and added this could erode excess capital and raise prices.

Insurers faced record bills from hurricanes, earthquakes and wildfires of over $135 billion in 2017 and got some relief in 2018.

UBS named Swiss Re SRENH.S as its least preferred stock and said its second buy-back was unlikely, with Lancashire LRE.L, Beazley BEZG.L and SCOR SCOR.PA set to gain most from an uptick in prices.

Reporting by Noor Zainab Hussain in Bengaluru; editing by Carolyn Cohn

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