United Insurance Holdings Corp (UPC) announced estimated Q3 catastrophe losses of about $83 million before income taxes, net of expected reinsurance recoveries.
Before reinsurance recoveries and income taxes, insured losses from Hurricanes Harvey and Irma reach $300 – $600 million, however, the firm’s catastrophe excess of loss reinsurance limits mean retained losses come to just $81 million which is further reduced to $73 million by its quota share reinsurance.
John Forney, President and CEO of UPC Insurance, said; “The strength of our capital structure and reinsurance program was proven by the cat events that have occurred in 2017.
“We have had two Cat 4 hurricanes make landfall in our two largest states and experienced a full retention on our non-hurricane catastrophe reinsurance program.
“Yet, we have at least $2.2 billion of reinsurance remaining for future cat events and, depending on how things go in Q4, a chance to be profitable for the year. We’re focused on serving our policyholders needs now, and building on this financial strength going forward.”
UPC’s subsidiary Blueline Re, which has a separate reinsurance programme for its commercial excess and surplus lines property business, is also expected to reach its $5 million retention for each hurricane, bringing the maximum combined group pre-tax retained losses from these events to $83 million.
Despite the hurricanes meaning the firm has dipped significantly into its reinsurance back-up, UPC remains adequately reinsured with an estimated $2.2 billion of reinsurance remaining for any future windstorm and earthquake catastrophe losses up to June 1st, 2018.
Maximum pre-tax retained losses on any future windstorm or earthquake during this period are $25 million for UPC and $5 million for Blueline Re.
UPC’s retained Q3 losses are just a fraction of the firm’s insured losses, demonstrating the effectiveness of a well-placed reinsurance programme that enables the firm to remain adequately capitalised and even profitable when faced with huge insured losses.
