Everest Re estimates $635m of Q3 catastrophe losses

Global insurance and reinsurance firm Everest Re, which also operates a third-party capital strategy in the Mt. Logan Re collateralized reinsurance sidecar-like vehicle, has pre-announced an expectation of its third-quarter catastrophe losses amounting to $635 million net.

Everest Re is the latest to pre-announce a significant catastrophe loss burden from the quarter, with the majority of the $635 million of losses set to come from hurricane Ida and the European flooding from July.

Everest Re gives its estimates of catastrophe losses pre-tax and net, which means they are reported after taking into account any estimated reinsurance or retrocession recoveries, as well as reinstatement costs, which also means this is after accounting for any portion of the losses shared with investors in the Mt. Logan Re structure.

This week we’ve already seen a significant loss pre-announcement from Bermudian reinsurance firm RenaissanceRe, of $725 million net, while fellow Bermudian Arch Capital also said this week that it anticipates up to $345 million of net losses from Q3 catastrophe events.

“The widespread impact of natural catastrophes in the third quarter has affected communities around the world,” commented Juan C. Andrade, President and CEO of Everest Re Group. “Our thoughts are with all of those affected, and we stand ready to help our customers and communities as they rebuild, recover and emerge even stronger.”

Everest Re anticipates a $415 million loss from hurricane Ida, split as $335 million in its reinsurance business and $80 million in its insurance business.

That’s based on an industry loss estimate for hurricane Ida of $28 billion to $30 billion, the company said, which is actually towards the lower-end of some expectations now, if you include the flood damage from Ida’s remnants.

On the European flooding in July, Everest Re estimates $220 million of catastrophe losses, which is all attributable to the reinsurance segment and based on an industry loss of around $12 billion.

Which means that overall Everest Re expects $555 million of losses to its reinsurance business from these two catastrophe events, plus another $80 million on the insurance side from Ida.

Interestingly, while other pre-announcements have included estimates for losses from other global catastrophe events that occurred during the third-quarter, Everest Re’s is solely focused on these two most significant losses.

For the investors backing Everest Re’s third-party capital venture, the Mt. Logan Re Ltd. collateralized reinsurance sidecar-like vehicle, some catastrophe losses are to be expected from these major third-quarter events, given the focus on property catastrophe reinsurance and retrocession that strategy has.

But it’s impossible to guess how much of Everest Re’s gross loss burden, which could be nearing the billion dollar mark, would be passed to investors in Mt. Logan Re and the different strategies within the vehicle will take different levels of impact as well.