A rescue worker marks debris in the city of Juchitan, Mexico, after an earthquake struck the southern coast of the country late Sept. 7./ REUTERS
A.M. Best Co. Inc. said Friday that it does not expect to see large insurance claims resulting from the earthquake that rocked the southwestern region of Mexico on Sept. 7.
The magnitude-8.1 earthquake killed at least 90 people across southern Mexico. The Oldwick, New Jersey-based ratings company said in a briefing that the epicenter was just off the Pacific coastal states of Oaxaca and Chiapas, but tremors could be felt over 500 miles away in Mexico City, as well as in neighboring Guatemala.
The earthquake rattled the region just hours before the expected nearby landfall of Hurricane Katia off of the Gulf of Mexico, the briefing said.
Currently, Best said it does not expect to take any ratings actions on any of the Mexican insurers that it rates.
In the early hours after the initial tremor, Best said, there have been more than 30 aftershocks with a magnitude of 4.5 or greater. The company said it expects infrastructure and housing damage to be limited to Oaxaca and Chiapas, the states closest to the epicenter.
“These states have among the highest poverty levels within the country and, therefore, lower insurance coverage,” the briefing said. “Mexico City reports minor damage to infrastructure, which is not expected to culminate in large claims for the industry.”
Best said that as of December 2016, earthquake catastrophic reserves were at $999 million, representing around 10% of the adjusted surplus, incorporating earthquake catastrophic reserves.
“Overall, while it is still too early to measure the full extent of the damage and losses derived from this event,” the briefing said, “A.M. Best foresees an increase in claims or the industry; however, net losses after reinsurance are not expected to translate into a significant drop in results as retention within catastrophic risk remains at conservative levels.”
In addition, the briefing said, the Mexican government has in place a catastrophe bond that was issued in August for up to $360 million against losses from earthquake and tropical cyclones that would be payable to the Fund for Natural Disasters.
“Such resources would be used to mitigate the impact on infrastructure and population in affected areas,” the briefing said.
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