USA — As wildfires continue to flare throughout Texas consuming more homes and creating more losses for insurers, Moodys Rating Service says the blazes will have a negative impact on insurers third quarter results when combined with other losses theyve experienced during the third quarter.
Moodys says even if the losses were three times more than the 1,600 homes Texas officials say are confirmed lost to fires, the losses are small compared with the U.S. property and casualty industrys earnings capacity and capital base.
Last week, the Insurance Council of Texas says it expects losses from the wildfires to exceed $100 million, which does put it close to, but not into the top 10 catastrophic U.S. wildfires.
Moodys says, the Texas wildfires will not be a major capital or credit event for the P&C industry. However, losses from the wildfires will pressure 2011 earnings, which have already weakened by high winterspring storm and tornado losses during the first half of the year and Hurricane Irene in the third quarter.
Insurers cannot expect much help from reinsurers, Moodys notes, because catastrophic retentions are designed to provide risk transfer for larger severity events such as hurricanes and earthquakes.
The worst of the fires in the state, Bastrop County, is now 60 percent contained, says the Texas Forest Service, with a total of 1,554 homes destroyed by the blaze. With an additional 87 homes lost in fires in other parts of the state, the total now stands at 1,641 homes.
Another 50 homes are threatened in other parts of the state, the Service says.
In the past seven days the Texas Forest Service says it has responded to 141 fires consuming 34,933 acres, with 19 new fires yesterday.
The Service says that 95 percent of the state is in extreme drought, with 81 percent in exceptional drought. The drought is expected to worsen through this year.