United (UPC) expects $35m of Q3 cat losses after reinsurance

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United Insurance Holdings (UPC Insurance) has announced that it expects to suffer a third-quarter 2018 catastrophe loss of around $35 million before tax and after reinsurance, including the impacts of hurricane Florence.

The catastrophe exposed property insurance specialist has a significant reinsurance program, featuring participation from numerous insurance-linked securities (ILS) fund players, as well as its Armor Re II Ltd. catastrophe bond program in-force.

United (UPC) said that it estimates that its third-quarter catastrophe losses will cost the insurer roughly $35 million before income tax (roughly $27 million after tax), which the company said is “net of expected reinsurance recoveries.”

For this year United (UPC) renewed its reinsurance program at an enlarged $3.1 billion, with a cascading design and significant participation from the capital markets.

The program has retentions of $60 million in Florida and $25 million for other states where the insurer operates.

The insurer said that its third-quarter catastrophe loss estimate includes claims from Hurricane Florence, as the firm underwrites policies in both North and South Carolina. It’s not clear whether hurricane Florence breached the $25 million retention for UPC, but it is possible given the company is set to call on its reinsurance arrangements for some support.

The Q3 loss estimate also includes losses from other new third quarter 2018 events and some development on catastrophe events that occurred earlier in the year.

United (UPC) has a quota share reinsurance arrangement with major reinsurers Munich Re, Transatlantic Reinsurance Company (TransRe), and General Reinsurance Corporation (Gen Re).

Also participating as key reinsurers in the firms program are ILS fund stalwarts Aeolus, Elementum, Nephila and Securis, hence it’s possible a portion of the firms losses may be supported by the capital markets.

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