Property and casualty (P&C) insurance company The Hanover Insurance Group, Inc. has released a preliminary estimate of its catastrophe losses for the third quarter of 2021, which it says will be in the range of $150 million to $165 million, before tax.
Estimated losses from Hurricane Ida alone are approximately $75 million, before tax, meaning nearly half of The Hanover’s losses for the quarter will likely stem from this one storm.
Most of the losses from Ida will be driven by flooding in the Northeast, the company added, with a smaller portion coming from the Gulf and Mid-Atlantic states.
When accounting for tax, The Hanover estimates that its overall catastrophe losses for the quarter will be in the range of $119 million to $130 million.
The midpoint of the estimate is approximately $97 million above the company’s pre-tax third quarter catastrophe load.
“Hurricane Ida caused widespread damage and tragic loss of life from the Gulf Coast to the Northeast,” said John C. Roche, President and Chief Executive Officer at The Hanover.
“Our thoughts are with all those who have been impacted. We are committed to helping our customers and their communities recover quickly. Our efforts to manage coastal exposure have been very successful in the past and will continue as we and the industry adjust to changing weather patterns.”
Hurricane Ida came in the midst of an already active catastrophe season in July and August, which included 18 industry catastrophe events that impacted The Hanover’s geographic footprint.
The Hanover also confirmed that it plans to release its third quarter financial results on October 27th, and said performance is expected to be positive despite the high level of catastrophe losses.
“Catastrophes aside, we expect our third quarter results to reflect our strong underlying performance, highlighting our distinctive market position, as well as our proven underwriting, pricing and risk management expertise,” Roche commented.
The company reported improved income $128.5 million in Q2 and a combined ratio of 94.4%, after incurring $76.8 million of catastrophe losses during the quarter, primarily from several wind, rain and hail events in the Midwest in June.
Several other insurers have already warned that they expect to take heavy losses from Hurricane Ida, including Allstate and Progressive who both said losses will be high enough to trigger reinsurance recoverables. In contrast, The Hartford’s initial loss figure of $200 million will likely fall outside of it’s reinsurance cover.
The latest estimates from RMS suggest that the overall impact to the re/insurance industry from Ida will be between $31 billion and $44 billion, including inland flood and National Flood Insurance Program (NFIP) losses for the Ohio Valley, Mid-Atlantic, and Northeast U.S. regions