Arch sees Q4 catastrophes costing up to $130m net of reinsurance


Bermuda headquartered insurance and reinsurance firm Arch Capital Group has estimated that catastrophes during the fourth-quarter of 2018, including hurricane Michael and the California wildfires, will cost it up to $130 million net of reinsurance and retrocessional recoveries.

Hurricane Michael and the California wildfires are the major driver of the Q4 loss impact for Arch Capital, alongside a number of smaller catastrophe losses around the globe.

Arch says it expects pre-tax catastrophe losses for Q4 to be between $110 million and $130 million from these events, net of reinsurance recoveries made and any reinstatement premiums. This range includes and updates the previously announced $40 million to $60 million of cat losses that Arch revealed in its Q3 results report, which was only related to hurricane Michael.

Arch notes the “significant uncertainties surrounding the number of claims and scope of damage for these events,” saying that its estimates are based on a combination of modelled analysis, industry loss estimates, preliminary claims information from clients and brokers, plus a review of its in-force contracts.

The losses largely came from Arch’s non-U.S. underwriting operations, most likely with its Bermuda reinsurance unit taking a significant share of the burden.

Arch will benefit from its third-party capital relationships in minimising the financial impact to the firm from these losses.

The third-party capitalised, total-return strategy reinsurance company Watford Re, which largely casualty and longer-tailed risk focused, may have taken some losses from these recent events and assist Arch in managing its exposure to the wildfires in particular.

Meanwhile Arch’s $600 million or more of third-party reinsurance capital under its management in insurance-linked securities (ILS) related assets, which sees the firm using its Arch Re underwriting platform to provide third-party investors with access to reinsurance-linked returns, will enable the firm to spread its losses and share the burden with these some of these capital sources as well.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.

Read previous post:
Rick Pagnani joins asset management giant PIMCO to head up ILS

Asset management giant PIMCO (Pacific Investment Management Company LLC), which is owned by Allianz S.E., is targeting the insurance-linked securities...