Re/insurers reveal the pain of Q3 storms
More reinsurers and insurers have released
details of their third quarter catastrophe
losses, reflecting the extent to which they were
exposed to losses stemming from the recent
hurricanes to make landfall in the US.
Bermuda-based Everest Re said it expects
to incur pre-tax catastrophe losses, net of
reinsurance and reinstatement premiums, of
$1.2 billion in the third quarter.
After taxes, the net economic impact is
estimated at $900 million, the company said.
The calculation includes losses from hurricanes
Harvey, Irma and Maria (HIM), as well as from
the earthquake events in Mexico.
Losses are on the company’s reinsurance and
its insurance segments. Everest’s view of its losses
from the events assumes an aggregate industry loss
in the range of $100 billion for the third quarter.
Everest Re also noted that it is the sponsor
of catastrophe bonds, through the Kilimanjaro
Re series, with $2.8 billion of multiyear
collateralised capacity for specific perils as well
as aggregate protection for losses arising from
named territories, including Texas, Florida, and
In addition, Everest’s capital market facility,
Mt. Logan Re, maintains close to $1 billion of
assets under management that further support
the company’s catastrophe exposures.
“Our robust balance sheet and strong risk
management programme provide assurance to
our clients that Everest will deliver when it matters
most,” said Everest Re CEO Dom Addesso.
Another Bermuda re/insurer, AXIS Capital
Holdings, said it expects the total net financial
impact from third quarter 2017 catastrophe
losses to be $578 million.
This loss is net of tax and estimated recoveries
from reinsurance and retrocessional covers, and
includes the impact of estimated reinstatement
“We have commenced paying claims for our
insureds, and our team will continue to work
tirelessly with our clients and partners so that we
can assist in the rebuilding efforts,” said AXIS
Capital CEO Albert Benchimol.
AXIS Capital CEO Albert Benchimol
Under the terms of the property catastrophe
reinsurance treaty which principally applies to
these events, the insurance segment maintains
cover in excess of $200 million per event, net
of recoveries from applicable property per-risk
treaty and facultative reinsurance, according to
The insurance and reinsurance segments
of the company both contributed to the aftertax
net losses. Retrocessional recoveries were
estimated at $136 million.
Tokio Marine Holdings said it expects
pre-tax incurred losses (net of reinsurance)
attributable to HIM, and the earthquakes in
Mexico, of approximately ¥65 billion ($580
The group maintains strict risk management,
according to the statement, and the adjusted net
assets for Tokio Marine Holdings for the fiscal
year ended March 31, 2017, is around ¥3.8
The company noted that it believes the
reported nat cat losses will have a minor impact
on the financial soundness of Tokio Marine
Arch Capital Group said it expects aftertax
costs of $285 million to $345 million from
natural catastrophes in the third quarter of
2017. The nat cat assessment includes HIM, the
Mexican earthquakes, and other more minor
Due to the mix of estimated catastrophic
losses by jurisdiction, Arch anticipates the tax
rate applicable to these catastrophic losses
to be lower than its effective annual tax rate
on pre-tax operating income. The company
determined a range for total industry insured
losses across all 2017 third quarter events of $80
billion to $100 billion.
The company warned that actual losses
may increase if the company’s reinsurers fail
to meet their obligations to the company or
the reinsurance protections purchased by
the company are exhausted or are otherwise
XL Group said it expects net losses of
approximately $1.33 billion relating to HIM,
with total catastrophe losses including smaller
loss events of approximately $1.48 billion in the
These preliminary estimates are pre-tax and
net of reinsurance, reinstatement and adjustment
premiums and redeemable non-controlling
interest. On an after-tax basis, the preliminary
estimate of total catastrophe net losses for the
quarter is approximately $1.35 billion.
Harvey, Irma and Maria contributed
approximately 25 percent, 40 percent and
25 percent, respectively, to the company loss
estimates, with 10 percent related to all other
events in the quarter, notably the Mexican
earthquakes and Typhoon Hato.
The estimated losses are approximately
evenly split between XL Group’s insurance and
reinsurance segments. The company noted that
after the events it continues to have significant
catastrophe reinsurance protections remaining
for 2017 and 2018, including catastrophe bond
protections, some of which extend through 2019.
XL’s CEO Mike McGavick said: “The
problem of underinsurance is again laid bare,
afflicting especially those who are already
less well off. It is appalling, and all of us with
expertise to offer must bend our minds to solving
these systemic failures.
“Risk awareness has changed due to these
events, and this in turn should cause the market
to move towards more realistic and sustainable
pricing for the risks undertaken.” n
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