Bermuda-based Platinum Underwriters Holdings has announced that it currently expects the 2011 Australian floods and Cyclone Yasi and the 2011 New Zealand earthquake will “have a net negative impact of approximately $25 million and $135 million, respectively, on the Company’s first quarter 2011 results.”
Platinum explained that the “net negative impact of these events includes estimates of losses and loss adjustment expenses, net of reinstatement premiums, taxes, retrocessional coverage and the expected impact of foreign exchange rates. The Company’s preliminary estimates are based on currently available industry loss estimates, market share analysis, the Company’s portfolio modeling and a review of the Company’s in-force contracts, as well as claims information and analysis received from certain brokers and clients.”
The Company also reaffirmed its confidence in the adequacy of its loss reserves for 2010 natural catastrophe events and commented on the recent earthquake and tsunami in Japan.
Platinum said its believes the “reserves it carries for natural catastrophe events that occurred in the year ended December 31, 2010, including the earthquakes in Chile and New Zealand, are adequate.”
The company also noted that it “provides reinsurance coverage for earthquake and tsunami risk in Japan and is currently assessing its exposures to the Tohoku earthquake that struck the northeastern coast of Japan less than two weeks ago.”
However, as most insurers and reinsurers have indicated, it is too early in the estimation process to adequately assess what the losses might be, as the full impact remains uncertain. However, Platinum did indicate that its “modeling of its property and marine portfolio indicates that the Company’s share of industry losses from the Tohoku earthquake will be between approximately 0.25 percent and 0.40 percent of total industry losses.”
Platinum’s CEO Michael D. Price commented: “Despite the recent increased frequency of major natural catastrophes, we believe Platinum remains well capitalized and we continue participating selectively in the reinsurance marketplace. The recent disasters demonstrate the inherent volatility of business exposed to property catastrophes. Nevertheless, we believe that writing such business, when adequately priced, is an important element of our strategy for delivering attractive long term returns to shareholders.
“We believe the Tohoku earthquake is an activation event under our contract with Topiary Capital Limited * and that we now benefit from up to $200 million of collateralized retrocessional protection for certain catastrophe events that may occur prior to August 2011,” he added.
Price also stated: “Our sympathies are with those adversely affected by these natural catastrophe events.”
Source: Platinum Underwriters Holdings, Ltd.
*[Ed note: A.M. Best has placed the cat bond ratings under review]
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