AM Best: Losses From Winter Storms to Carve Into 2026 First Quarter Earnings
Why It Matters
The storms’ projected $4‑$7 billion loss exposure will compress Q1 2026 earnings, testing insurers’ pricing and risk‑management strategies and influencing investor sentiment across the property‑casualty sector.
Key Takeaways
- •Winter storms Hernando and Fern will cut Q1 2026 profits
- •Insured losses from Fern estimated between $4‑$7 billion this year
- •Primary carriers will retain most storm losses, limited reinsurance
- •2025 PC segment rebounded via rate hikes and disciplined underwriting
- •Strong investment income bolstered overall insurer profitability in 2025
Summary
The video features AM Best industry analyst Helen Anderson discussing how the twin winter storms—Hernando and Fern—are expected to erode property‑casualty insurers’ first‑quarter 2026 earnings. Anderson notes that while the hit will be material, it will not match the severity of last year’s California wildfire losses.
Fern’s insured losses are projected at $4‑$7 billion, and damage assessments for the more recent Hernando are still underway. Most of the exposure will stay on primary carriers, with reinsurance playing a minimal role, a contrast to the broader reinsurance market’s involvement in larger, aggregated catastrophes.
Anderson highlights that the PC segment performed strongly in 2025 despite early‑year wildfire setbacks, thanks to significant rate hikes in personal auto and homeowners lines, disciplined underwriting, and robust investment income. She emphasizes that “most of these losses will probably be retained by primary carriers,” underscoring the limited safety net from reinsurers.
The outlook suggests insurers must tighten underwriting discipline and possibly adjust pricing to offset the upcoming storm‑driven loss drag, while investors should monitor Q1 results for signs of earnings pressure and resilience in the face of escalating climate‑related events.
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