Primary insurers will get hit hardest by Hurricane Harvey, which made landfall on the Texas Gulf Coast late Friday night as a Category 4 hurricane before downgrading to a tropical storm over the weekend and continued to dump record rainfall on Houston and surrounding areas Monday.

“Primary insurers will face the largest effect from Harvey, with regionally focused carriers most vulnerable given their geographic concentrations,” Moody’s Investor Services Inc. said in a Sector Comment on Monday morning.

Reinsurers with U.S Southeast exposure will also be hit but should be able to absorb the losses, the New York-based rating agency said.

“The Southeast is a peak catastrophe zone in the U.S. for reinsurers, and those with exposure to Texas are at risk of incurring meaningful losses, although we expect those losses to be manageable relative to earnings,” Moody’s said in its analysis.

According to Moody’s, the top 10 commercial insurers in Texas are: CNA Financial Corp., with $523 million of direct written premium in 2016; Liberty Mutual Insurance Co., with $405 million in premium; American International Group Inc. with $330 million; Travelers Cos. Inc. with $323 million; Germania Mutual Insurance with $289 million; Chubb Ltd. with $268 million; Farmers Insurance Group of Companies with $231 million; Zurich Insurance Group Ltd., written by Zurich American Insurance Co., with $229 million); Nationwide Mutual Insurance Co. with $207 million; and Assurant Inc. with $192 million.

Moody’s added that the Texas Windstorm Insurance Association, which is also positioned to absorb losses beside insurers, provided about $67.6 billion of coverage as of June 30, with total payment capacity is about $4.9 billion.

The National Hurricane Center’s 7 a.m. Monday advisory said that “catastrophic and life-threatening flooding continues in southeastern Texas, and flash flood emergencies are in effect for portions of this area.”

The center said that a slow northeastward motion is expected to begin on Tuesday, with the center of Harvey emerging off of the middle Texas coast and expected to remain just offshore through Tuesday.

Rain is expected to continue with “additional rainfall accumulations of 15 to 25 inches through Friday over the upper Texas coast and into southwestern Louisiana,” the center said, with isolated totals reaching as high as 50 inches over the upper Texas coast, including the Houston/Galveston metropolitan area.

Rain accumulations of five to 15 inches are expected farther south into the middle Texas coast, farther west toward the Texas Hill Country, and farther east across south-central Louisiana, the center said.

The center said it is too early to begin calculating the cost of the storm.

“It will take some time to determine the magnitude of insured damages and the degree to which the hurricane affects various industry participants,” the center said.

Analyst Keefe, Bruyette, & Woods Inc. in a note Monday morning also said it is early in? the process but that damages may exceed initial projections, which were in “low nine figures.”

“Although it’s still too early for credible estimates, we expect insured losses to exceed initial low-single-digit billion dollar estimates that emerged on Friday, with flooding likely driving significant personal and commercial auto and commercial property losses,” KBW said in its note.

AIR Worldwide reported that in Rockport, Texas, four miles west of the landfall location, extensive building damage has been reported, including a large part of a high school caving in, a collapsed roof at a senior center and structural damage to the courthouse and other downtown buildings.

The company added, however, that “it is still in the very early aftermath of landfall, and reconnaissance has only just begun.”

Aon Benfield’s Impact Forecasting said the amount of rain in Houston has already equaled that from tropical storm Allison in 2001, previously considered the worst flood event in Houston’s recorded history, with an estimated $11.9 billion in economic damage in current dollars, less than half of which — some $5.0 billion current dollars — was covered by insurance.


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