Latest Sandy-Loss Estimates From Axis Capital, Platinum, Beazley

December 18, 2012

Axis Capital Holdings Ltd. said this week its preliminary estimate of the total net financial impact of Sandy is around $300 million — net of tax and estimated recoveries from reinsurance and including estimated reinstatement premiums.

The Pembroke, Bermuda-based provider of specialty lines insurance and treaty reinsurance said the net financial impact is expected to be split evenly between the insurance and reinsurance segments.

Within the reinsurance segment, losses are primarily arising from property catastrophe and property per risk treaty reinsurance with commercial property exposure.

Within the insurance segment, losses are primarily coming from the property line of business which is mostly comprised of commercial property exposures in North America, and are also coming from the marine line of business — which includes cargo, recreational marine, fine art and specie coverages impacted by the event.

The company said its exposure to Sandy is consistent with the company’s current market position in the affected region, particularly with respect to commercial exposure in both segments.

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Axis Capital said it expects to retain all losses emanating from its reinsurance segment. And based on the preliminary estimate of losses emanating from its insurance segment, the company said it expects recoveries under applicable property and marine per risk treaty reinsurance and property catastrophe treaty reinsurance.

Under the terms of catastrophe treaty reinsurance protecting its insurance operations, Axis Capital will retain 100 percent of the first $150 million in losses, net of recoveries from per risk treaty and facultative reinsurance, and 50 percent of the next $100 million layer.

The company’s loss estimate for Sandy is generally based on its ground-up assessment of losses from individual contracts and treaties exposed to the affected region — including preliminary information from clients, brokers and loss adjusters. The company also considered industry insured loss estimates, market share analyses and catastrophe modeling analyses, where appropriate.

Axis Capital said that due to the nature of this event — including the scope of the storm and the complexity of loss assessment and factors contributing to the losses, especially business interruption — the actual ultimate amount of losses and reinsurance recoveries may be materially different from the current estimate.

Loss Estimates From Platinum Underwriters, Beazley

Separately, Hamilton, Bermuda-based Platinum Underwriters Holdings Ltd. said it expects Sandy will have a net negative impact of some $30 million on the company’s fourth-quarter results. The net negative impact includes a preliminary estimate of losses and loss adjustment expenses, net of retrocessional coverage, reinstatement premiums and income taxes.

Platinum Underwriters said the estimated net negative impact from Sandy is generally based on a review of the company’s in-force contracts and claims information and analysis received from brokers and cedants as well as the company’s portfolio modeling and market share analysis.

The company said actual net negative impact of this event may differ materially from the current estimate due to the inherent uncertainties of making such estimates — including the preliminary nature of available information, uncertainties in loss development patterns, the use of portfolio models in the estimation process and potential inaccuracies and inadequacies in data provided by clients and brokers.

Additionally, Dublin, Ireland-based Beazley plc announced its net losses arising from Superstorm Sandy are currently estimated to be $90 million, based on market losses of around US$20 billion. Beazley said the majority of the claims will be covered by catastrophe margins and the company therefore expects a full year 2012 combined ratio in the low nineties.

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