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Reinsurance segment to assume majority of EMC’s record Q3 cat losses

18th October 2017 - Author: Luke Gallin

EMC Insurance Group Inc.’s reinsurance segment will take the majority of the firm’s record third-quarter catastrophe losses of $29.4 million, which includes losses from hurricanes Harvey, Irma, and Maria, and the Mexico earthquakes.

EMC Insurance GroupThe $29.4 million sum is net of inter-company reinsurance recoveries, and includes approximately $9.9 million to its property and casualty insurance segment, and $19.5 million to its reinsurance segment.

The insurance segment loss includes less than $1 million of combined Harvey and Irma losses, explains EMC.

For its reinsurance segment the $19.5 million expected catastrophe loss for the third-quarter is a record for the company, and includes $9 million of losses from Harvey, $7.5 million from Irma, and $3 million from Maria, and roughly $1.5 million of losses from the two Mexico earthquakes.

President and Chief Executive Officer (CEO) of EMC, Bruce G. Kelley, said; “Our third quarter saw record catastrophic events that primarily impacted our reinsurance segment. Our claims professionals are working diligently to speed the recovery of our policyholders and reinsurance clients; our thoughts are with those suffering from these devastating events.”

RMS

EMC explains that the loss to its reinsurance segment is prior to recoveries from its reinsurance unit’s annual aggregate catastrophe excess of loss arrangement with Employers Mutual Casualty Company. Which sees the firm retain $20 million with a limit of $100 million, and a 20% co-participation.

With this factored in, the reinsurance segment expects to retain $15.8 million of cat losses to fill the retention, with a further $2.2 million relating to its 20% co-participation on $11.2 million of losses above the retention limit, explains EMC.

Furthermore, the reinsurance segment expects to receive $1.3 million in reinstatement premiums from these hurricane losses.

“Having filled the annual aggregate retention, the reinsurance segment will be a 20 percent co-participant in any fourth quarter catastrophic events that are greater than $500,000, up to the $100 million limit of coverage.,” explains EMC.

The firm’s reinsurance subsidiary also has a per-occurrence catastrophe treaty in place, but with a retention limit of $10 million for each event, it doesn’t expect any recoveries under this agreement, or under its additional reinsurance protection that was purchased.

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