Cincinnati Financial Corporation has revealed that the property casualty group of Cincinnati Insurance Companies expects to experience pre-tax catastrophe losses of up to $114 million in the third-quarter of 2017, which could push its combined ratio above 100% for the period.
The firm anticipates pre-tax catastrophe losses of between $102 million and $114 million, with $20 million coming from hurricane Harvey, between $54 million and $66 million for hurricane Irma, and roughly $6 million for hurricane Maria.
The firm explains that for Harvey its reinsurance operation, Cincinnati Re, will assume $12 million of the loss, with the remaining $8 million being split between commercial lines insurance ($5 million) and its personal lines insurance segment ($3 million).
For Irma, between $18 million and $30 million of the loss is with Cincinnati Re, with $15 million for commercial business and $20 million for personal lines.
And for Maria, the $6 million loss is for Cincinnati Re, explains the company.
For all other catastrophe losses in the quarter, Cincinnati notes an estimated hit of $11 million each for both commercial and personal lines.
This suggests that at the high end of estimates, the company’s reinsurance operations will assume around $48 million, or 42% of the losses from hurricanes Harvey, Irma, and Maria.
The company explains that the losses suggest an impact on its Q3 2017 combined ratio of between 8.6 and 9.6 percentage points, with its ten-year historical average contribution of cat losses to the combined ratio being 4.8 percentage points for Q3.
As a result, the firm estimates that its combined ratio for the third-quarter of 2017 will come in at between 98.5% to 101.5%, suggesting it could record an underwriting loss on the back of recent catastrophe events.
“Our agents and policyholders across the southeast United States felt the impacts from hurricanes Harvey and Irma. When your community experiences an event of this magnitude, you value the difference professional, knowledgeable Cincinnati claims representatives bring as they inspect your property quickly and in-person.
“We take the responsibility of paying our claims seriously and manage our capital to ensure we have ample capacity to pay insured losses promptly. Our long-term focus allows us to partner with the best independent agents in the country and to provide the highest quality service during the claims handling process,” said Steven J. Johnston, President and Chief Executive Officer (CEO) of the company.
