RenaissanceRe issues initial nat cat loss estimate
RenaissanceRe Holdings has announced that it is expecting an initial estimated net negative impact of $625 million from Hurricanes Harvey, Irma and Maria and the Mexico City Earthquake. These events caused widespread damage to both personal and commercial property in and around the impacted regions.
The company currently estimates that losses from Hurricanes Harvey and Irma will have a net negative impact of approximately $225 million and $175 million, respectively, on its third quarter 2017 results of operations.
In addition, the company currently estimates that the combined losses from Hurricane Maria and the Mexico City Earthquake will have a net negative impact of approximately $225 million on its third quarter 2017 results of operations.
“We extend our sympathies to all those affected by these recent catastrophic events, and recognize their enormous human impact,” said Kevin J. O'Donnell, CEO of RenaissanceRe. “As we have always done, we stand ready to help rebuild the many affected communities by serving our customers and paying claims.”
RenaissanceRe said that this net negative impact includes the sum of estimates of net claims and claim expenses incurred, earned reinstatement premiums assumed and ceded, lost profit commissions and redeemable noncontrolling interest. The company's estimates are based on a review of its potential exposures, preliminary discussions with certain counterparties and catastrophe modeling techniques. Meaningful uncertainty regarding the estimates and the nature and extent of the losses from these events remains, driven by the magnitude and recent occurrence of each event, relatively limited claims data received to date, the contingent nature of business interruption and other exposures, potential uncertainties relating to reinsurance recoveries and other factors inherent in loss estimation, among other things.
The company believes these estimates may be even more uncertain for the two more recent events, Hurricane Maria and the Mexico City Earthquake because, among other things, recovery, insurance loss adjusting and exposure estimates are at earlier stages.
Furthermore, seismic events such as the Mexico City Earthquake generally have longer development periods than windstorm events, which may be amplified in this instance by dynamics such as the risk of geological liquefaction and the potential for uncertainty in claims adjudication. In respect of Hurricane Maria, recovery efforts are ongoing and expanding, with power outages, infrastructure damage, communications disruptions and other issues complicating loss mitigation and estimation.
As a result of this RenaissanceRe said that its actual net negative impact from all four events, both individually and in the aggregate, will vary from these preliminary estimates, perhaps materially. Updated loss estimates related to these events will be reflected in RenaissanceRe's third quarter 2017 results, when reported.
