United Insurance Holdings (UPC Insurance) revealed during its second-quarter 2018 earnings call that it has increased its gross reserves for hurricane Irma by 56% to $623 million.
The loss creep for hurricane Irma has continued through 2018, and UPC Insurance is the latest to reveal that after witnessing the start of some loss creep in February, by the time April arrived, it was clear that a trend was developing that required the firm to increase its reserves.
The insurer provided guidance on its Irma loss estimate in September, 2017, fairly soon after the storm had hit, stating that combined hurricane Harvey and Irma losses would be between $300 million and $600 million, with the majority of this related to Irma, and to be assumed by its reinsurance partners.
However, during the firm’s Q2 earnings call, Chief Executive Officer (CEO), John Forney, explained that its September 2017 estimate of $450 million for both Harvey and Irma (which is the mid-point of its total loss range), of which $400 million, or 89% is related to Irma, has increased by 56%.
“Today, our gross reserve for Irma sits at $623 million. That did include a small change at year-end, and then, obviously, a bigger change in the first-half of this year,” said Forney.
Brad Martz, the company’s Chief Financial Officer (CFO), added that the increase in reserves for Irma wasn’t something that happened in the second-quarter of 2018, but something that was done in Q1, explaining that “it’s not news to any of our reinsurers that we deal with.”
“And, I think, based on the most recent PCS and modelled estimates, our share of the losses on Irma are significantly less than our market share of the business. And, so, our book performed very well on Irma,” said Martz.
In addition, the CFO explained that, so far, United Insurance has paid out over $400 million on hurricane Irma, with a huge chunk of this being incurred but not reported (IBNR) losses.
