Primary insurance giant Allstate has begun to eat into its reinsurance protection after suffering an estimated $576 million of gross catastrophe losses, pre-tax, due to the impacts of hurricane Harvey.
It had largely been expected that the major insurers like Allstate would retain the entire impacts of hurricane Harvey, given the wind versus water split in loss estimates.
But Allstate has revealed that it expects to claim back $23 million in reinsurance recoveries, leaving it with a net estimated loss of $553 million for hurricane Harvey.
Allstate revealed its hurricane Harvey estimated losses in its August 2017 catastrophe loss disclosure, with its total loss estimate for the month pegged at $593 million, pre-tax ($385 million after-tax) from 6 separate catastrophe events.
For hurricane Harvey the estimated loss of $553 million is around 55% attributed to auto lines, while the company also explained that it expects to suffer losses and expenses of around $53 million that are not covered by its reinsurance related to commercial insurance, auto protection contracts and loss adjusting expenses in excess of its reinsurance allowances.
More than half a billion dollars of losses have fallen to Allstate from hurricane Harvey and the insurer will be expected to pick up another big bill for hurricane Irma as well, raising its third-quarter 2017 loss ratio.
The Irma bill, which will be factored into Allstate’s September loss estimates, may not be as large though as the insurers auto book has clearly been severely impacted by the Texas flooding caused by Harvey and Allstate has moved away from coastal wind exposures over the years.
Allstate noted that its estimate for hurricane Harvey could well change, likely rising, as the loss event is so complex and many of the insurers customers have not yet gained sufficient access to their homes or autos to be able to submit their claims.
Allstate is retaining the bulk of the hurricane Harvey exposures, but it may be able to tap into its reinsurance further for future losses, including the impacts of hurricane Irma.