The Progressive Corporation has significantly reduced its loss estimate for hurricane Ian, lowering it by $400 million to $1 billion, which implies the insurer will be making a smaller reinsurance recovery than it initially anticipated.
Back in October, Progressive said that its property losses and allocated loss adjustment expenses from hurricane Ian were estimated to be $1.4 billion.
That had driven an increase in its reinsurance recoverable of roughly $1.2 billion, the company had explained at the time, as its retention was just $200 million.
Now, Progressive says that its loss and allocated loss adjustment expenses (ALAE) after hurricane Ian are estimated to be $1 billion, reflecting the favorable development of $400 million.
Everything above the $200 million retention is dealt with by Progressive’s reinsurance program, it seems, meaning the favourable development does not affect its results, but it will no doubt reduce the amounts its reinsurers are taking.
Progressive has also estimated vehicle losses of $585 million, including boats and recreational vehicles from hurricane Ian, on top of the property losses.
The company said that this element of its estimate is not changed by this announcement of favourable development.