RenaissanceRe estimates $90m net California wildfire hit


Bermudian reinsurance firm and third-party capital manager RenaissanceRe Holdings Ltd. has estimated that the October 2017 California wildfires will have a net negative impact of $90 million on its fourth quarter 2017 results.

California wildfire image from Getty, via BBCThe reinsurer’s estimate is based on information on claims it has to-date, a review of its potential exposures in the affected regions of California, preliminary discussions with ceding companies and the use of catastrophe models.

RenaissanceRe notes the “meaningful uncertainty” associated with the estimates and the “nature and extent of the losses” the reinsurance firm has suffered from the October wildfires in California.

RenRe highlights a raft of issues creating this uncertainty, including the magnitude of the wildfire events, their recency, the fact that claims data received to date remains limited, the potential impact from business interruption and other exposures to the claims total, as well as potential uncertainties relating to the firms ability to make reinsurance recoveries.

Kevin J. O’Donnell, CEO of RenaissanceRe, commented on the announcement of the wildfire losses, “We extend our sympathies to all those affected by the October 2017 California Wildfires. This catastrophe once again highlights the critical role that the insurance and reinsurance industry plays in protecting people and rebuilding communities in the wake of natural disasters. As we have demonstrated consistently in the past, we stand ready to serve our customers in responding to the losses and promptly paying claims.”

RenaissanceRe said that its final estimate of losses from the October wildfires in California could differ from the figure announced today.

Given the magnitude of the loss estimate announced by Nationwide Mutual, which we revealed yesterday, and the continued uncertainty over where the industry loss from the wildfires will settle (currently put at between $10 billion to $15 billion), there is a good chance that companies loss estimates will rise rather than fall.

Also worth considering is the potential for further losses to hit reinsurance from the recent Ventura County wildfires, which only broke out this week.

RenaissanceRe, in announcing its loss estimate as net, is including the fact that some of its third-party capital backed reinsurance vehicles may well have taken some losses from the wildfires as well.

It’s likely that the DaVinciRe reinsurance vehicle will have some exposure and possible that the Upsilon retrocession vehicle and its Fibonacci Re special purpose insurance vehicle may also see some exposure to these wildfire events, given the magnitude of the losses expected.

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