Reporting a preliminary assessment of just under $1 billion from a Mexican insurance trade group, Moody’s said substantial claim losses from Hurricane Odile are a credit negative for Mexican insurers.

In its weekly credit outlook yesterday, Moody’s said that Asociacion Mexicana de Instituciones de Seguros (AMIS), the Mexican insurance trade group, puts the damage associated with the hurricane at more than MXN12 billion ($950 million) for now, adding that final Odile-related costs will take months to tally, attributing the lag to delays associate with estimating and reporting contingent business interruption claims.

The damage caused by this Category 3 hurricane is credit negative for Mexican insurers because it exposes them to potentially substantial claim losses related to property damage, business interruption, hotel and entertainment operations, and travel interruption and cancellation, said Moody’s listing Mexico’s Top 10 P/C insurers ranked by earthquake and other catastrophic gross premiums written.

  • AXA Seguros
  • Aseguradora Interacciones
  • Seguros Inbursa
  • Seguros Banorte Generali
  • Agroasemex
  • Mapfre Tepeyac
  • Grupo Mexico de Seguros
  • Grupo Nacional Provincial
  • Zurich, Cia de Seguros
  • Seguros Atlas

Along with the Top 10 insurer listing, compiled using information from Comisión Nacional de Seguros y Fianzas, Mexico’s insurance regulator, Moody’s shows the catastrophe gross premium as a percent of cat reserves and sharesholders equity for each of the companies—ranging from a low of 9 percent for Grupo Nacional Provincal to a high of 230 percent for Aseguradora Interacciones.

The storm and ensuing flooding from Hurricane Odile, which hit the Mexican west and northwest coastlines on Sept. 14 and 15, affected more than 300,000 residents, most of whom live in the state of Baja California Sur, the Moody’s report said, noting that the tourist resort of Los Cabos was hit particularly hard.

Separately, Standard & Poor’s announced late last week that it placed a catastrophe bond rating on CreditWatch with negative implications in the wake of Odile—the ‘B- (sf)’ rating on MultiCat Mexico Ltd.’s series 2012-I class C notes.

The CreditWatch placement reflects the possibility that a triggering event—based on an central pressure measurement—may have occurred. If a triggering event did occur, as is suggested by a National Hurricane Center reading at a station within the covered area, then noteholders would lose 50 percent of their principal amount, S&P said.

The rating will be resolved after a report from the calculation agent, AIR Worldwide, S&P said, suggesting that it could take as much as 120 days post landfall to resolve the rating. If a triggering event occurred, the rating will be lowered to ‘D (sf)’, S&P said.

Sources: Moody’s, S&P