U.S. specialty insurance group Assurant has said that it is expecting hurricane Dorian to drive the bulk of an expected $46 million of pre-tax and after reinsurance catastrophe losses for the third-quarter of 2019.
Assurant said yesterday that hurricane Dorian is expected to drive roughly 70% of its catastrophe losses for Q3, while tropical storm Imelda, while loss creep from prior years drove the rest.
Hurricane Dorian is estimated to have cost the company $33 million before tax and after taking into account reinsurance, while tropical storm Imelda is estimated at just $7 million and loss creep added $6 million more.
The quarterly catastrophe loss bill of $46 million after reinsurance drops to $36 million after-tax, covering only catastrophe events that cost the company $5 million or more, pre-tax and net of reinsurance.
The losses largely fell in Assurant’s Global Housing segment during the third quarter of 2019.
With hurricane dorian the main driver, particularly in the Bahamas, where Assurant said it has incurred losses from assumed residential policies in the region.
In addition, but to a lesser extent, hurricane Dorian also drove losses in parts of the Mid-Atlantic United States for Assurant’s lender-placed and manufactured housing products.
Tropical storm Imelda meanwhile, largely affected Assurant’s manufactured housing and lender-placed products in Texas, the company explained.
The additional $6 million of loss creep comes from loss events in both 2017 and 2018, again after any reinsurance benefit has been accounted for.
Assurant placed an enlarged reinsurance program for 2019, with the retention reduced by almost two-thirds, providing the insurer with much improved protection against catastrophe losses.
As a result, Assurant is likely to have passed on a share of its Dorian losses at least to its reinsurance panel, perhaps also from Imelda and the prior year loss creep.
Assurant is currently looking at expanding its catastrophe reinsurance protection through the use of more quota shares and also aggregate protection, which would again increase the robustness of its program.
Reducing volatility in its results has been a mission of Assurant’s over recent years, something we understand is likely to continue at its next reinsurance renewal.