U.S. primary insurer Kemper Corporation said that it expects to recover around half of its fourth-quarter 2018 catastrophe losses from its reinsurance providers, with the majority to be received through its catastrophe aggregate cover.
Kemper said today that it estimates that the firms Q4 2018 results will be impacted by pre-tax catastrophe losses, from events including the California wildfires, of between $25 million and $30 million, net of reinsurance.
Being net of reinsurance this is not the gross loss that Kemper expects from the catastrophe events in the fourth-quarter, this figure is expected to be as much as $65 million it seems.
Kemper said that it expects to be able to claims as much as $30 million to $35 million of reinsurance recoveries from its panel of protection providers, with the majority expected to come through its catastrophe aggregate reinsurance arrangement.
The insurer noted that 2018 saw the first time Kemper purchased a catastrophe aggregate reinsurance program, which it says is designed to “mitigate capital and earnings volatility associated with high-frequency, low-severity catastrophe events.”
Aggregate reinsurance contracts have been among the most impacted in 2018, as the number of mid-sized catastrophe industry losses means occurrence reinsurance arrangements have often avoided major impacts.
But the repeated loss events qualifying under these aggregate towers means claims are flooding to reinsurers from those wo purchased aggregate protection, with a share of the losses often falling to ILS funds and collateralised players, given they are frequent backers of aggregate programs.