Allstate says reinsurance recoveries to reduce $1.4bn hurricane Ida loss

US primary insurance carrier Allstate expects a $1.4 billion gross loss from recent hurricane Ida, but said that this will be reduced significantly to an estimated $631 million, pre-tax, thanks to what appear significant reinsurance recoveries from its excess-of-loss program.

Allstate’s estimate of its losses from hurricane Ida factors in the damage across 19 states of the US, but with the majority coming from Louisiana.

The upshot of this is estimated gross losses due to hurricane Ida of $1.4 billion.

But, after accounting for expected reinsurance recoveries under its core Nationwide Excess Catastrophe Reinsurance Program and allowing for a partial offset due to reinstatement premiums, the bill is greatly reduced.

After reinsurance and reinstatements are accounted for, Allstate said that its hurricane Ida net loss will be around $631 million, pre-tax ($498 million, after-tax).

Which suggests the company could be recovering somewhere around the $750 million, or so, figure from its reinsurance panel.

For the month of August, Allstate estimates that its catastrophe losses will be $876 million, or $692 million, after-tax.

The August catastrophe bill includes 11 events, at an estimated cost of $843 million plus some unfavorable prior period reserve reestimates, the insurer said.

For the third-quarter so far, Allstate’s pre-tax catastrophe losses now stand at $1.1 billion.

Allstate had closed out the second-quarter of 2021 with $952 million of pre-tax catastrophe losses, which was a relatively high quarter for the company.

The third-quarter looks set to be far higher, now thanks to hurricane Ida, although the benefits of robust reinsurance coverage are once again very clear in Allstate’s results.

Of course, the other factor to consider, is that Allstate’s aggregate deductible will be getting eroded by this activity, with Ida set to erode a significant chunk, which effectively heightens the risk for the insurers catastrophe bonds over the rest of the risk peruod that runs to April next year.