Blue Capital Re reveals Q3 Irma loss creep, Florence & Jebi costs

Blue Capital Reinsurance Holdings Ltd., the listed, collateralized reinsurance vehicle owned by Sompo International Holdings Ltd., has revealed that it continued to feel the effects of hurricane Irma during the third-quarter with loss creep from the storm set to outweigh the costs of any catastrophe activity that occurred during the period.

Hurricane Irma’s loss creep has become a major story for the reinsurance and ILS sector, as the estimates of industry loss have kept rising and issues surrounding assignment of benefits (AOB) and reopened claims continue to drive higher costs.

Blue Capital Re, the New York stock exchange listed fully collateralized reinsurer managed by Blue Capital Management, has been reporting its impacts from Irma regularly and has again pre-warned of continuing creep of its ultimate net losses from the hurricane.

During the third-quarter of 2018, Blue Capital Re said that it expects to report an impact of $6.1 million due to increases in the firms estimated losses related to Hurricane Irma, as well as another $4.1 million of Q3 2018 catastrophe losses, largely attributable to Hurricane Florence and Typhoon Jebi.

In total, the firm said that its third quarter results will be dented by around $10.2 million dollars of catastrophe losses, net of reinsurance and reinstatement premiums.

Given Blue Capital Re’s strategy is akin to an ILS fund this provides a decent read-through for how other ILS and collateralized vehicles will have experienced third-quarter cats and also signals that both Florence and Jebi are likely to cause some attrition to many ILS fund strategies, hitting September results.

Hurricane Irma continues to deliver losses to the market and this is likely set to continue for some months to come, as AOB issues and open claim counts remain prevalent in the Florida market.

It will be interesting to see how the market’s claims experience with hurricane Michael compares and whether industry loss estimates for that storm take a similar length of time to settle.