South Africa headquartered financial services investment holding company RMI has disclosed details of its insurance subsidiary losses to catastrophe events in its home country and in Australia, and has reported how its reinsurance protection will interact with these losses.
In South Africa, RMI was exposed via its OUTsurance Holdings Limited business to the KwaZulu-Natal flood events, which caused significant damage to coastal and inland areas during April 2022.
OUTsurance currently estimates a gross exposure range of between R400 million to R450 million (US $25 million to $28 million), with 90% of claims now assessed and 60% settled.
However, RMI notes that estimation uncertainty remains high as a result of the magnitude of the event and the potential of inflationary developments.
Nevertheless, the gross exposure is well within the cover provided for by OUTsurance’s catastrophe reinsurance program, as its excess of loss program attaches for events in excess of R50 million.
In addition to the retention amount of R50 million, OUTsurance is required to pay additional reinsurance reinstatement premiums, so including the reinstatement premiums, the overall net loss from this event is estimated between R160 million and R200 million (US $10 million to $13 million).
In Australia, meanwhile, RMI had exposure to the Melbourne earthquake and various large storm events via its Youi Holdings Proprietary Limited business.
These events did not breach the A$30 million catastrophe retention level despite the ultimate claims cost for these events having exceeded initial estimates by A$8 million.
The severe flood events experienced in Queensland and New South Wales during February and March 2022 have been interpreted as three individual events under the terms of Youi’s reinsurance program, meaning Youi’s retained net loss from the flooding events was A$6 million in aggregate.
The estimated gross ultimate loss across these three events is the largest in Youi’s history and estimated at A$140 million, but RMI assures that the exposure is adequately covered by Youi’s catastrophe excess of loss and natural perils aggregate reinsurance programs.
The group further noted that above average rainfall patterns experienced in both South Africa and Australia over the course of the financial year to date continues to impact overall claims experience, and acknowledged that higher claims inflation continues to put upward pressure on ultimate claims cost.