AXIS expects up to $90m winter storm loss, based on industry hit up to $14bn

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AXIS Capital, the Bermuda-based, globally-active insurance and reinsurance company, has pre-announced an expectation that it will shoulder up to $90 million of losses after February’s US winter storms, which it bases on an expected industry-wide loss of between $13 billion and $14 billion.

AXIS Capital logoOverall for the first-quarter of 2021, AXIS Capital is predicting that its first quarter net losses from catastrophes and other weather-related events will come out between $105 million and $115 million, pre-tax ($95 million to $105 million, after-tax).

Included within this, are a pre-tax net loss estimate of between $80 million and $90 million for winter storms Uri and Viola, with losses largely emanating from the state of Texas.

AXIS said that it believes this level of impact to be consistent with industry-wide insured losses of around $13 billion to $14 billion for the winter storms.

That sits around the middle of most estimates from insurance and reinsurance analysts, although at a level that could prove too low if the winter storms drive much in the way of loss creep, or if loss amplification is as high as some anticipate due to inflationary factors.

AXIS’ pre-announcement came on the heels of one from fellow-Bermudian RenaissanceRe, which forecast a $180 million net loss from winter storm Uri.

Like RenRe, we’d expect AXIS Capital to share some of the losses from the winter storms and freezing weather with its third-party reinsurance capital investors, which it classifies as Strategic Capital Partners.

At an industry loss above $10 billion, any major catastrophe event is likely to see third-party reinsurance capital absorbing a share of major reinsurers losses through their partnerships, joint-ventures and some of the insurance-linked securities (ILS) structures they operate.

Positively, AXIS Capital also took the opportunity to hold its net loss estimate for the COVID-19 pandemic stable.

The company also highlighted continuing improvements in its current accident year loss ratios, excluding catastrophe and weather-related losses, across both its insurance and reinsurance segments, which AXIS says is consistent with progress made in 2020.

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