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Matthew losses likely manageable for Florida property insurers, says Fitch

Fitch Ratings does not expect Hurricane Matthew to present amajor capital challenge for Florida property insurers.

The hurricane will pressure the earnings of some insuranceunderwriters in Florida and other southeast states. An evaluation of damage relatedto Matthew will depend heavily on the storm's ultimate path.

The storm is a Category 3 hurricane with maximum sustainedwinds at 120 mph, according to an 11 a.m. ET advisory notice issued by the National Hurricane Centeron Oct. 7. "Very preliminary" figures estimated by RMS and publishedby The Insurance Insider project about a 42% chance of a $20billion loss for the insurance industry as a result of the storm. The firmestimates an 86% chance that the loss will be greater than $5 billion.

Fitch estimates that if the storm results in insured lossesin excess of $10 billion, a greater proportion of losses will be borne byreinsurers as opposed to primary companies. The smaller Floridaspecialist homeowners insurers hold approximately 60% of the state's homeownersinsurance market share. The five primary insurers with the largest homeownersexposure in Florida are UniversalInsurance Holdings Inc., Shively Group, State Farm Mutual Group, andFederated National Insurance Co.

Property insurers writing business in Florida rely heavilyon reinsurance protection and other methods to mitigate their risk of extremelosses. As a result, the Florida HurricaneCatastrophe Fund, the traditional and collateralized reinsurance marketsand the catastrophe bond market could have meaningful exposure to losses fromMatthew.

Among private entities, Lloyd's of London appears to be the next-largestreinsurer, followed by AllianzSE, Tokio MarineHoldings Inc., Everest Re Group Ltd. and .