The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas First says Hurricane Dorian's devastation caused its "largest motor vehicle" loss ever with 538 claims producing gross losses of more $6m in that business category.

The property and casualty insurer's 2019 annual report adds that while most of that sum was covered by its reinsurers, most claims were for "total losses" due to the impact of the category five hurricane's storm surges and associated flooding.

"Hurricane Dorian produced our largest motor loss arising from a natural disaster with some 538 claims across the affected areas," Bahamas First informed shareholders. "Our gross losses were over $6m for this line of business, but this was reduced considerably by reinsurance recoveries.

"The vast majority of these claims resulted in total losses for the vehicles concerned and, hopefully, this will result in relatively robust replacement vehicle activity in the two islands that were mainly impacted.

"We continued to see vehicle and premium growth in both Cayman and The Bahamas, with gross premiums reaching just shy of $40m in 2019. Apart from hurricane related claims, there were no significant claims activity or concerns within the motor and liability portfolio."

Bahamas First added that Hurricane Dorian also produced its largest-ever marine loss. "The marine portfolio recorded its largest ever hurricane loss, with 91 individual claims amounting to a gross loss of $5m. This gross loss was reduced considerably by reinsurance recoveries, and we anticipate rate and performance improvements in the not too distant future," it said.

Dorian reconstruction in Abaco and Grand Bahama is anticipated "to generate a significant amount of growth" in Bahamas First's engineering (performance bond) segment, the company adding: "We have both the capacity and the underwriting experience to deal with this eventuality."

Turning to its most heavily-impacted insurance niche, property, the underwriter said it faced the challenge of aligning premium rates with reinsurers' expectations as a result of the sector's $1.5bn-$2bn total payouts due to Hurricane Dorian.

"The occurrence of Hurricane Dorian renewed the focus and effort around rate adequacy for property business, not only in The Bahamas, but elsewhere in the region," Bahamas First said.

"In order to secure the long-term reinsurance capacity, which is vital to our continued participation in this segment of our business, we have taken steps to ensure that our targeted rates in both jurisdictions are aligned with reinsurers' expectations and our true net costs associated with this line of business.

"Our risk selection process, and general underwriting approach, have also been extensively reviewed to take into account the lessons learned from Dorian. There will be the inevitable loss of business in both Grand Bahama and Abaco, where properties have been completely destroyed or rendered uninsurable, which will take some time to come back to the market," the insurer added.

"The situation is more acute in Abaco, and the extent to which the COVID-19 pandemic will exacerbate the situation cannot be fully known at this stage. On the brighter side, we are confident that we will be able to maintain our market share in The Bahamas and protect those parts of the property portfolio, within the Cayman market, where pricing adequately reflects the exposure.

"Despite the disruption in business activities in The Bahamas, the group's property premiums, on a gross basis, were relatively flat at $69m in 2019 compared to the prior year."