Cedar Rapids, Iowa-based United Fire & Casualty Co. announced that it will record $10 million in pre-tax losses related to certain first quarter catastrophe losses incurred in the company’s assumed reinsurance portfolio.
In the first quarter of 2011, United Fire expects assumed premiums of approximately $1.5 million. The estimated losses for these catastrophe events would be expected to contribute approximately 9.8 percentage points to the first-quarter property casualty combined ratio. The impact on after-tax earnings would be approximately $6.5 million, or .25 cents per share.
Randy A. Ramlo, president and CEO, said: “Most of the business United Fire assumes from other insurance or reinsurance companies is property insurance, with an emphasis on catastrophe coverage. The $10 million relates to the February 2011 earthquake in New Zealand and the March 2011 earthquake and tsunami in Japan.”
Ramolo added that while “assumed business has not been a significant component of our property and casualty operations over the years, it traditionally has been a positive contributor to our bottom line.”
He said that on an annualized basis the losses would contribute less than 1.7 percentage points to United Fire’s combined ratio.
Assumed reinsurance premiums contributed an average of $13.9 million, or 3.1 percent of the total, to United Fire’s net written premiums from 2005 to 2010. Over that six-year period, the assumed reinsurance loss ratio averaged 48.7 percent.
The company plans to report final first-quarter results on May 2, 2011.
Source: United Fire & Casualty Company
Topics Profit Loss Reinsurance
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