Arch Capital Group has announced that because of the significant level of catastrophic event activity in the third quarter of 2017, it made a net loss of $52.8 million in that period. This compares to the $247.4 million in net income it made over the third quarter of 2016.
As a result of this the company said that its net income for the nine months ended September 30, 2017 came to $363.0 million, down substantially on the $602.3 million for the same period of 2016.
The company also reported an after-tax operating loss to Arch common shareholders, a non-GAAP measure, of $107.1 million, for the third quarter of 2017, compared to after-tax operating income to Arch common shareholders of $149.6 million, for the third quarter of 2016. For the nine months ended September 30, 2017, Arch Capital reported after-tax operating income available to Arch common shareholders of $259.8 million, compared to $435.9 million for the 2016 period.
Arch Capital said that gross written premiums for the third quarter of 2017 came to $1.65 billion, a 28.9 percent rise from the $1.28 billion it wrote over the same period of 2016.
According to Arch its third quarter results reflect estimated after-tax net losses from current accident year catastrophic events of $319.8 million, net of reinsurance and reinstatement premiums and excluding the ‘other’ segment. The company said that these losses were primarily related to Hurricanes Harvey, Irma and Maria, along with the Mexican earthquakes and other more minor global events. Arch said that its estimates for these events are based on currently available information derived from modelling techniques, industry assessments of exposure, preliminary claims information obtained from the Company’s clients and brokers to date and a review of in-force contracts.
However, Arch added the caveat that its actual losses from these events “may vary materially from the estimates due to the inherent uncertainties in making such determinations resulting from several factors, including the preliminary nature of available information, the potential inaccuracies and inadequacies in the data provided by clients and brokers, the modelling techniques and the application of such techniques, the contingent nature of business interruption exposures, the effects of any resultant demand surge on claims activity and attendant coverage issues. In addition, 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 unavailable.”
Arch, Capital, Group, results, quarter, catastrophic, Hurricanes, Harvey, Irma, Maria