Property and casualty insurer The Hartford is anticipating a post-tax, fourth quarter net catastrophe hit of between $350 million and $365 million, a figure which includes the Camp and Woolsey fires in California as well as hurricane Michael.
In reaction to this loss announcement, equity analysts at Credit Suisse have stated that these estimates are double the amount they had expected.
“While losses are higher than we expected, we point out that HIG (The Hartford) has a $350m per event reinsurance program, implying that should losses rise further, reinsurance protection is close to being triggered.”
For the per-occurrence reinsurance layer to trigger, a single event needs to breach the $350 million trigger, suggesting the wildfire losses will need to rise much higher.
Looking back at The Hartford’s catastrophe losses from across 2018, it’s very possible that the company is also close to triggering its $825 million aggregate reinsurance, which would offer $200 million of protection above that.
This aggregate layer of reinsurance protection runs for the calendar year 2018.
It’s important to note, however, that we cannot be certain of the extent to which the company’s previous 2018 cat losses qualify under this aggregate reinsurance protection.
To qualify, an event must be a Property Claim Services (PCS) designated catastrophe loss and we cannot see that designation for every cat loss The Hartford has reported through the year to date.
