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Analysis: Aggregate reported losses from Q3 catastrophes reach $20bn

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Aggregate reported net losses from Q3 catastrophes across the (re)insurance industry have now passed the $20bn mark, analysis by Insurance Insider shows.

More than 50 major (re)insurers have now updated the market on their Q3 performance, with a number of significant players having released figures since this publication’s last review of the available data on 1 November.

Disclosures made in the last 10 days include $3.5bn in net losses from Hurricane Ida.

Between them, North American carriers Progressive ($505mn), Liberty Mutual ($812mn), Fairfax ($340mn) and Alleghany ($264mn) accounted for more than half of that total $3.5bn increase, while reinsurers Hannover Re ($361mn) and PartnerRe ($188mn) also suffered substantial hits.

These latest figures have taken aggregate reported Ida losses tracked by Insurance Insider to $8.6bn as at Wednesday 10 November.

This total only includes losses from listed (re)insurers and a small number of privately-owned firms which report on a quarterly basis. Nonetheless, comparison to estimates of total industry insured losses for Ida shows that it remains some way short of the $25-35bn range around which expectations from the likes of Swiss Re, RMS and AIR converge.

Last month, underwriting sources told this publication that the volume and quantum of claims submitted to date was far lower than expected for a disaster of that magnitude.

However, just over two months after the hurricane hit Louisiana, it is still relatively early in the claims reporting cycle - and, in an inflationary environment, there remains scope for significant loss creep.

Hannover Re also disclosed a significant net loss ($252mn) from storm Bernd last week, as the financial impact of July’s European floods (now $4.1bn in total) continues to accumulate.

On a call to discuss the carrier’s Q3 results, the company noted that there was there was a “relatively high” difference between Hannover Re’s gross Bernd loss ($743mn) and its net position, and said that it could claim retrocession recoveries from both its K-Cessions sidecar and its whole account excess-of-loss (XoL) protection for the event.

Fellow German reinsurer Munich Re had already flagged its expected loss from Bernd of approximately $707mn in advance of its Q3 release, but used its results call to reaffirm its commitment to cat business.

Cat business is a volatile business, but it is a profitable business long-term,” said CFO Christoph Jurecka. “We saw hardening of many cat-prone markets over the last few years, and that was highly necessary.”

Jurecka added that he was “pretty optimistic” about price increases in Europe at 1.1, while in other locations there would be rate hikes – but “the pressure is less” than on the continent.

Having also recorded a large loss from Hurricane Ida ($1.4bn), Munich is among the top 10 for biggest hits to equity of the peer group of carriers reporting so far.

Since Insurance Insider’s previous analysis of this data, several other companies have reported large total cat losses relative to equity.

SiriusPoint joined a number of other Bermuda-headquartered (re)insurers near the top of the table above, with its disclosed net catastrophe losses for Q3 of $287mn equating to more than 10% of its total equity balance at the end of Q2.

Meanwhile, FedNat - which provides property and casualty cover to the Florida homeowners market - has recorded the biggest proportionate hit so far: a $20.3mn net loss, equivalent to more than 20% of total equity.

In absolute dollar terms, no company has recorded a larger total loss for the quarter from catastrophe events than Berkshire Hathaway. However, its $2.2bn hit was relatively insignificant given the conglomerate’s $479bn total equity balance as at 30 June.

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