Blue Capital Reinsurance Holdings Ltd., the Bermuda-based reinsurer owned by Sompo International Holdings Ltd., is expecting to incur catastrophe losses of around $17.0 million in the fourth quarter of 2018, including losses related to Hurricane Michael and the California wildfires.
The company explained that its Q4 catastrophe loss estimate was net of reinsurance and reinstatement premiums.
Based on its current estimates, Blue Capital Re expects its year-end fully converted book value per common share to be between $11.25 and $12.00.
Expected losses are up significantly when compared to Blue Capital Re’s results for the previous quarter, which were impacted by $10.2 million of natural catastrophe losses, the majority of which ($6.1 million) were due to loss creep from Hurricane Irma.
Q3 catastrophe losses pushed Blue Capital Re’s results into the red for both the third quarter and the first nine months of this year, posting net losses of $6.7 million and $3.7 million for the respective periods.
The reinsurer explained that its loss estimates have been derived from the utilisation of proprietary catastrophe modelling, standard industry models, an in-depth review of in-force contracts and initial indications from clients and brokers.
It added that its actual losses may ultimately differ materially from estimated losses due to the nature of the risk assumed, the complexity of the assessment of the damages, and the limited number of reported claims to date.
Recent analysis by reinsurer Munich Re puts total re/insurance industry losses for Hurricane Michael at around $10 billion, while catastrophe risk modellers RMS and AIR Worldwide agreed that total insured losses from the recent California wildfires are likely to be in the range of $9 billion to $13 billion.
