RenaissanceRe, the Bermuda headquartered reinsurance and third-party capital management specialist, has pre-announced an estimated $650 million of catastrophe losses from the third-quarter of 2022, with $540 million expected from hurricane Ian.
As a result of the catastrophe losses, RenaissanceRe (RenRe) said that it “expects to report a net loss attributable to common shareholders for both the third quarter of 2022 and nine months ended September 30, 2022.”
An operating loss is also expected to be reported for Q3, but for the year-to-date, while an operating loss is anticipated, it is expected to be “modest” RenRe explained.
Of course, with its significant amount of capital from third-party capital partners as well, the losses from these catastrophe events, in particular hurricane Ian, are set to dent performance for the majority of the joint venture and insurance-linked securities (ILS) fund vehicles RenRe manages through its Capital Partners team.
The $650 million of cat losses reported are given net, so this will be after any retrocessional reinsurance recoveries and after the shares taken by RenRe’s third-party capital and ILS vehicles.
Meaning that the gross loss impact will be significantly higher, but then moderated by the use of capital from joint venture partners and institutional investors, as well as any other retro reinsurance arrangements, which helps to moderate the impact to equity shareholders, with the catastrophe losses spread across RenRe’s range of balance-sheets.
Hurricane Ian was the main catastrophe loss of Q3, as you’d expect, while the net negative impact of catastrophes during the quarter also included other global cat events, as well as the aggregate losses associated with them all.
Kevin J. O’Donnell, President and Chief Executive Officer of RenaissanceRe, said, “We extend our sympathies to all those impacted by the quarter’s catastrophic events. Our purpose is to protect communities and enable prosperity, and we stand ready to pay our customers’ claims to help communities rebuild.”
O’Donnell also gave a little forward-looking insight into how the company is feeling about the opportunity ahead of it.
“Looking forward, we have the capital, scale, and flexibility to provide our customers with much needed reinsurance in 2023 while creating value for our shareholders,” he explained.
Analysts at KBW had previously estimated that RenRe would face a roughly 9% hit from hurricane Ian, as a percentage of common equity. But after seeing the loss announcement, KBW’s analysts said it is just over 12%,
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