Insurers draw $78b from reinsurers to settle Hurricane Melissa claims

Insurance companies received a near sixfold increase in reinsurance funds to settle claims arising from Hurricane Melissa, according to the latest data from the Financial Services Commission (FSC), which regulates the sector.

“This significant boost was primarily driven by a 472 per cent, or $77.7 billion, rise in reinsurance contract held assets from payouts from reinsurance companies that boosted claims recovery reserve related to the impact of Hurricane Melissa in October 2025,” stated the FSC Insurance Sector Review for the December quarter.

Total assets across the insurance sector reached $729.5 billion as at December 2025, up 28 per cent, or $159 billion, year-on-year. “This increase was driven mainly by the general insurance sector, reflecting the balance-sheet effects associated with Hurricane Melissa,” the FSC said.

The sector comprises 17 registered insurers – six life and 11 general insurance companies, 10 of which are fully operational, with one operating as a branch.

General insurers bore the brunt of Melissa’s impact. Total assets for the segment more than doubled to $220.7 billion from $101.7 billion a year earlier, driven mainly by the rise in reinsurance contract held assets.

Insurance service expenses for general insurers rose 222.6 per cent to $140.5 billion in the 12 months to December 2025, almost entirely driven by Hurricane Melissa claims, the FSC noted. The surge in claims costs swamped revenue growth of 8.6 per cent, compressing the insurance service result. Profit after tax for general insurers fell 99 per cent to near nil from $2.6 billion a year earlier.

Despite the earnings pressure, the general insurance industry maintained sufficient capital, exceeding the Minimum Capital Test regulatory benchmark of 150 per cent, though the FSC noted a reduction in solvency levels. Capital and surplus declined 15.4 per cent to $29.2 billion, driven by dividend payments and retained losses.

The life insurance sector was insulated from the storm’s direct claims impact. Profit after tax rose 20 per cent to $21.5 billion, driven by a 10 per cent rise in revenue and a 58 per cent widening of the insurance service result to $22.6 billion. Total assets for life insurers grew 8.5 per cent to $508.8 billion, with invested assets up 8.4 per cent to $413 billion. Capital and surplus rose to $136 billion from $122 billion. All life insurers reported solvency ratios above the 10 per cent regulatory benchmark and exceeded the LICAT benchmark of 100 per cent.

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