Bermuda headquartered reinsurance specialist RenaissanceRe Holdings Ltd. has estimated that its net claims burden from catastrophe events around the world in the third-quarter of 2021 will amount to a huge $725 million.
Calling the expected loss a “net negative impact” RenaissanceRe said that the majority will come from hurricane Ida’s impacts in the United States.
The $725 million estimated hit to third-quarter earnings includes RenRe’s net claims and claim expenses incurred, earned reinstatement premiums assumed and ceded, earned and lost profit commissions and also redeemable noncontrolling interest.
The estimates are based on RenRe’s evaluation of potential exposures, preliminary discussions with certain counterparties and actuarial modeling techniques.
Hurricane Ida’s impacts are estimated to have driven a net hit of around $440 million, while the European flooding is estimated as another $210 million.
The remainder of the $725 million estimate is due to losses from other catastrophe events, as well as aggregate losses associated with Ida, the floods and other events.
Kevin J. O’Donnell, President and Chief Executive Officer of RenaissanceRe, said, “We extend our sympathies to the many people around the world impacted by the quarter’s catastrophic events. In another active season for hurricanes, floods, and other natural disasters, we are rapidly paying our customers’ claims, which helps communities recover and reinforces the value of the protection we provide. Looking ahead to 2022, our fortress balance sheet and superior customer relationships should allow us to extend our leadership in the global reinsurance market.”
It’s a particularly significant pre-announcement from RenaissanceRe, even larger than it had made after the trio of 2017 hurricanes back around the same time in 2017.
Of course, the reinsurer is larger than it was in 2017, having raised and deployed new capital in that time, but also supposedly more diverse, given its expansion into other lines of business outside of property catastrophe risks.
But RenRe remains one of the largest catastrophe reinsurers in the market, so it would always be expected to experience a significant hit from these events.
The companies third-party capital partners and investors in its insurance-linked securities (ILS) strategies will also be taking a share, with losses from these Q3 catastrophes likely to be shared across the Capital Partners platform.
RenaissanceRe is the second of the Bermudian companies to report its Q3 catastrophe losses, after Arch Capital pre-announced an up to $345 million impact a day prior.