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TransRe typhoon losses weigh heavily on Alleghany results

20th February 2020 - Author: Matt Sheehan

Investment holding company Alleghany Corporation has posted an underwriting profit of just $33 million for 2019, weighed down by catastrophe losses incurred by its reinsurance arm, Transatlantic Reinsurance Company (TransRe).

TransReTransRe recorded an underwriting loss of $40.9 million for the year after being hit by $301 million of catastrophe losses, mostly due to Typhoon Hagibis in the fourth quarter.

These losses meant TransRe’s combined ratio was 100.9% for 2019 overall, and 114.% for the fourth quarter of the year.

Nevertheless, this did represent an improvement on TransRe’s 2018 performance, when it incurred $500 million of catastrophe losses and posted a combined ratio of 105.4% for the year.

The reinsurance segment also increased its net premiums written by 13.2% compared with 2018, primarily reflecting growth in its domestic operations, including the purchase of the renewal rights to a block of US treaty reinsurance business.

Including its primary insurance business, Alleghany’s overall catastrophe losses totalled $400 million in 2019, mostly from Typhoons Hagibis and Faxai.

This compares with $658 million of catastrophe losses in 2018 – mostly from Typhoon Jebi, California wildfires and Hurricane Michael – which resulted in an underwriting loss of $162 million.

Alleghany’s net earnings were $858 million in 2019, compared with just $40 million in 2018.

“In the fourth quarter, Alleghany’s results were negatively impacted by significant catastrophe losses at both TransRe and RSUI, an increase in prior accident year reserves at CapSpecialty, and certain one-time items at Alleghany Capital’s largest businesses, all substantially offset by an increase in the value of our equity portfolio,” said Weston Hicks, President and CEO at Alleghany.

“All three of our (re)insurance businesses delivered double digit premium growth in 2019, which accelerated in the fourth quarter and reflected improving rates, terms and conditions. We believe these market conditions combined with our underwriting talent and strong balance sheet leave us poised for strong, profitable underwriting growth in 2020,” Hicks continued.

“Alleghany Capital produced excellent 2019 results, growing revenue by 45% and adjusted earnings before taxes by 71%. This performance reflects strong underlying results at all seven of its operating companies including organic growth and the addition of several strategic add-on acquisitions.”

“Looking ahead, we expect continued increasing earnings from Alleghany Capital, although growth will be seasonally weighted towards the second half of the year in 2020.”

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