Auto and property insurance focused Progressive Corporation recovered $80 million from its reinsurance in August, after the impacts of catastrophe losses during the month, in particular hurricane Laura and Isaias, triggered both its aggregate and per-occurrence protection.
Progressive said that its property line of business combined ratio elevated to 147.1% for August 2020, driven by a 52.7% catastrophe loss ratio, which seems to have resulted in the ability for the insurer to call on its reinsurance partners for support.
In August, almost 70% of Progressive’s gross catastrophe losses came from hurricane Isaias and hurricane Laura, while tornado and wind events across the U.S. Midwest drove most of the rest.
These losses enabled Progressive to call on both catastrophe aggregate excess of loss and per-occurrence reinsurance protection.
Progressive made a $70 million reinsurance recovery under its catastrophe aggregate excess of loss reinsurance program in August.
The higher level of catastrophe losses during the month, largely due to the hurricane activity, drove 2020 catastrophe losses and associated loss adjustment expenses (ALAE) for Progressive’s Property business above the $375 million annual retention or attachment point.
This means, with the aggregate reinsurance now attached, further potential recoveries could be possible for September loss activity and with hurricane Sally another major event that could cause Progressive property insurance losses this aggregate program may find itself paying out again at the end of this month.
On top of this Progressive recorded a further $10 million reinsurance recovery from its per-occurrence catastrophe reinsurance program, as the Property insurance losses and ALAE from hurricane Laura was sufficient to exceed the $80 million single storm retention for this program.
As a result, reinsurance capital providers are paying out $80 million in total to Progressive for its August catastrophe loss activity.