Arch Capital Group, the Bermuda headquartered, globally active insurance and reinsurance company, has pre-announced an expectation of third-quarter natural catastrophe losses of between $330 million to $345 million.
The high catastrophe estimate is given on a net of reinsurance or retrocession recoveries and pre-tax basis and affects Arch Capital’s property casualty insurance and reinsurance segments.
The range of estimates encompasses losses from hurricane Ida, the European severe flooding and other global catastrophe events from the third-quarter of 2021.
The company said late yesterday that it has set up a range of pre-tax catastrophe losses, between $330 million to $345 million, in the 2021 third quarter, across its property casualty insurance and reinsurance segments, net of reinsurance recoveries and reinstatement premiums.
These estimates are commensurate with a high industry toll, Arch explained, as it based its loss picks on industry loss estimates of $30 billion for Hurricane Ida, $12 billion for the European floods and over $5 billion for other global events.
That’s a total of over $47 billion of industry losses for Q3 2021, a figure that we expect will run higher, especially as Arch Capital’s hurricane Ida loss pick seems a little on the low-side, as it doesn’t allow much scope for loss creep at the industry level.
Roughly two-thirds of the losses reported by Arch come from its reinsurance segment.
Arch did not the “significant uncertainties surrounding the ultimate number of claims and scope of damage resulting from these events.”
The company highlighted that these estimates are only based on claims incurred as of Sept. 30th 2021, so actual losses from could “vary materially from the estimate.”
At the same time, Arch also announced that its Board of Directors has increased its share repurchase program to an aggregate of up to $1.5 billion, as the company continues to be able to return capital despite these heavy losses.
Arch Capital is the first of the major Bermudian re/insurers to provide an estimate of losses for Q3 and for hurricane Ida, or the European floods.
We expect other, equally large, loss pre-announcements from others in the Bermuda cohort in the coming days, before the third-quarter 2021 results season commences.