XL releases storm damage loss estimate
XL Group has announced that its preliminary estimate of net losses relating to Hurricanes Harvey, Irma and Maria is approximately $1.33 billion.
The company said that for the third quarter of 2017, total catastrophe losses including smaller loss events are preliminarily estimated at approximately $1.48 billion. 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.
The preliminary estimates are based on a combination of catastrophe modeling, exposure analysis and preliminary ground-up notifications and are consistent with private insured market loss estimates for Hurricanes Harvey, Irma and Maria in the range of $75 billion to $90 billion. Hurricanes Harvey, Irma and Maria each 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, most notably the Mexican earthquakes and Typhoon Hato.
XL Group said that the estimated losses are approximately evenly split between its insurance and reinsurance segments.
Following these events and meaningful reinsurance recoveries this quarter, the company continues to have significant catastrophe reinsurance protections remaining for 2017 and 2018, including catastrophe bond protections, some of which extend through 2019.
“Our hearts break at the havoc caused by these events; the terrible pain and anguish suffered,” said XL’s CEO Mike McGavick.
“We are proud of our people, some of whom have had their own losses to deal with, who are working tirelessly with our partners to help our clients in these difficult times.
“And, as ever, the problem of underinsurance is again laid bare, afflicting especially those already less well off. It is appalling, and all of us with expertise to offer must bend our minds to solving these systemic failures.
“In terms of the effects on XL itself, given the specific nature of the events themselves our estimated losses are largely in line with our expectations, and our capital strength and talented teams ensure that we remain positioned to continue solving the risk needs of clients and brokers.
“As for market conditions, 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."
The company pointed out that given the complexities and the nature of these particular events, including the magnitude, proximity and recent occurrence of these events, limited claims data received to date, the likelihood of longer development periods associated with the specific characteristics of these events, the geographic and infrastructure limitations related to the areas impacted and factors inherent in loss estimation, among other matters, there is considerable uncertainty associated with these loss estimates, and as such, they are accordingly subject to revision as additional information becomes available.
Actual losses may differ materially from these preliminary estimates.
