XL sees $200m California wildfire loss, primarily from reinsurance unit

Insurance and reinsurance group XL, which trades under the XL Catlin brand, has announced an estimate of its fourth-quarter 2017 catastrophe losses, putting the bill at $250 million, around $200 million of which is due to California wildfire losses suffered by the firms reinsurance unit.

The $250 million of Q4 2017 catastrophe losses that XL Group expects is pre-tax and after taking into account reinsurance, reinstatement and adjustment premiums and redeemable non-controlling interest.

XL has a number of outstanding catastrophe bonds, some of which are annual aggregate in nature, but these don’t provide coverage for wildfire losses and so these figures will not add to their qualifying tally.

XL’s estimate being net of reinsurance suggests that the company is likely to find some retrocessional protection to support its payment of Q4 losses though, some of which could be ILS or alternative capital backed.

Also, the fact the losses are net of support from non-controlling interests could also suggest a portion will be paid for by third-party capital sources, perhaps from the XL affiliated ILS fund manager New Ocean Capital.

The $250 million figure includes a number of smaller loss events as well as the $200 million from the California wildfires.

Additionally, XL said that it was reconfirming its third-quarter 2017 loss estimates, which it had put as close to $1.5 billion.

With the wildfire losses still developing and further new wildfire outbreaks in California set to increase the totals, there is plenty of time for the fourth-quarter catastrophe loss impact to XL to increase before this period ends.

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