Insurers Report Estimated Q1 Catastrophe Losses

April 20, 2021

Carriers are starting to report their pretax catastrophe loss estimates for the 2021 first quarter, and the numbers are significant. Below are preliminary numbers from Allstate, Arch, AXIS, and The Hanover.

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The Allstate Corp. said it had nearly $1.7 billion in pre-tax catastrophe losses during the 2021 first quarter, including $252 million in pre-tax losses in March alone.

The Q1 pretax calculation was partially offset by more than $1 billion in anticipated reinsurance and subrogation recoveries.

After taxes, that number comes down to $466 million for the quarter, and $54 million for March once anticipated reinsurance recoveries are factored in.

Allstate blamed catastrophe losses in March on six events costing $208 million, plus greater prior period reserve estimates of $44 million. A single large wind/hail event accounted for approximately 55 percent of March estimated catastrophe losses. The nationwide aggregate reinsurance cover will offset $184 million of losses.

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Arch Capital Group warned that it will experience Q1 2021 pretax catastrophe losses ranging from $180 million to $190 million, across its property casualty insurance and reinsurance segments, net of reinsurance recoveries and reinstatement premiums.

A small amount of that estimate covers ongoing exposure to COVID-19 global pandemic claims in the current accident quarter.

Arch’s initial estimates for winter storms Uri and Viola are based on a range of industry insured losses of $14 billion to $16 billion. The losses are currently expected to be split approximately 80 percent and 20 percent between the Company’s reinsurance and insurance businesses, respectively.

Arch’s estimates across its insurance and reinsurance segments are based in part on preliminary claims information obtained from clients and brokers, a review of relevant in-force contracts and estimates of reinsurance recoverables. These estimates include losses only related to claims incurred as of March 31, 2021.

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Bermuda-based AXIS Capital Holdings Ltd. announced a preliminary, pre-tax first quarter net loss estimate for catastrophes and other weather-related events in the range of $105 million to $115 million, or $95 million to $105 million, after-tax.

The pre-tax net loss estimate includes an amount of $80 million to $90 million for Winter Storms Uri and Viola, principally related to the state of Texas, and is consistent with industry insured losses of approximately $13 billion to $14 billion.

The Company also reaffirmed no change to its net loss estimate established for the COVID-19 pandemic in 2020.

Separately, AXIS Capital noted continuing improvements in its current accident year loss ratios, excluding catastrophe and weather-related losses for its insurance and reinsurance segments consistent with the progress observed in 2020.

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The Hanover Insurance Group predicts first quarter pretax catastrophe losses will be approximately $133 million, or $105 million after tax.

Here’s what is driving that number: Severe winter freeze events that spread throughout the Southern United States in February. The largest impact was in Texas, where the company estimates catastrophe losses related to two major winter events to be approximately $90 million, before taxes, primarily in its commercial multiple peril line.

Sources: Allstate, Arch Capital Group, AXIS Capital Holdings Ltd., The Hanover

Topics Carriers Catastrophe Profit Loss

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