CHANNELS

Subscribe to the InfoTech eNewsletter

infoTECH News

TMCNet:  Fitch: Quake and Tsunami Losses in North Chile Unlikely to Impact Chilean Insurance Ratings

[April 09, 2014]

Fitch: Quake and Tsunami Losses in North Chile Unlikely to Impact Chilean Insurance Ratings

SANTIAGO, Chile --(Business Wire)--

Based on preliminary analysis, Fitch Ratings believes that industry solvency will not be affected by the recent Iquique earthquake and tsunami. Chilean property/casualty (P&C) insurance industry will likely absorb limited losses from the earthquake and tsunami that hit the north part of Chile on April 1, 2014. Fitch considers unlikely an impact on the insurer's solvency, and ratings due to a relatively reduced damage to the infrastructure, roads, commercial buildings and housing; which suggests low insured losses.

The earthquake had a magnitude of 8.2 on the Richter scale and the tsunami did not affected major cities. The largest impact of the catastrophe will be related to housing, public buildings, small fishing boats, and seaport on not densely populated areas. Due to the sparsely population and no major economic activity as mining, the impacts would be a lot less than the earthquake of Feb. 27, 2010. Initial estimates suggests that around 1,300 houses were affected with severe damage and other 11,400 houses with some damage, among the infrastructure stands out principal roads, and the Iquique seaport. From those, there are still not solid estimates about the number of insured houses.

Local insurance companies have adequate reinsurance coverage, which reduces the possible losses. Fitch notes that historically reinsurers have honored their obligations in a timely manner in the event of major catastrophes and that total losses from the earthquake and tsunami should be relatively easily absorbed by the reinsurance industry as a whole. The ceded risk represents about 69% of the total premiums placed on international, experienced and prestigious reinsurers.

The Chilean P&C insurance market is regulated by anadvanced regulatory framework and concentrated market, in which foreign primary insurers hold major equity stakes. Among companies with premiums of earthquake stands out Mapfre, RSA (News - Alert) Seguros, Liberty, AIG, ACE, Chilena y Santander (Zurich Group), while locally owned insurance companies (sometimes associated with large local financial groups) make up the remainder of the list of the 10 largest insurance companies in the country, managing around 94% of total collected premium as of December 2013.

As of December 2013, the group of P&C companies managed a total equity of USD1,067 million; while the amounts exposed by company in case of catastrophe (CAT) normally does not run more than 10% of the individual equity of the companies (after reinsurance); being that a large number of companies shows significantly lower CAT exposure levels. Fitch considers unlikely that companies will present operating losses, and the ratings currently assigned to P&C companies in Chile may not be significantly affected.

As noted, this commentary reflects Fitch's initial and preliminary assessment, and there is a chance actual results could differ materially from these expectations. Fitch will provide additional comments should its views change for either the market as a whole or for any individual company.

Additional information available on 'www.fitchratings.cl' or 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.


[ InfoTech Spotlight's Homepage ]


blog comments powered by Disqus

FOLLOW US

Subscribe to InfoTECH Spotlight eNews

InfoTECH Spotlight eNews delivers the latest news impacting technology in the IT industry each week. Sign up to receive FREE breaking news today!
FREE eNewsletter