Reinsurance News

United (UPC) reports $36.4m Hurricane Ian loss for Q3

13th October 2022 - Author: Matt Sheehan

Property and casualty insurer United Insurance Holdings Corp. (UPC Insurance) has disclosed that it expects to incur $36.4 million of losses from Hurricane Ian in the third quarter of the year.

This figure is net of expected reinsurance recoveries, United specified, as it looks set to pass on the vast majority of the its gross losses from the storm to the reinsurance market.

United explained that the $36.4 million figure consists of a net retention of $16.4 million split approximately $7.4 million to United Property & Casualty Insurance Company and $9.0 million to American Coastal Insurance Company, plus a $20 million retention by its captive reinsurer, UPC Re.

The company has received approximately 19,000 claims to date and estimates it will receive 27,000 to 30,000 claims in total with a gross estimated loss of $1 billion.

It’s not clear if the $36.4 million loss estimate reflects only claims received to date or the total expected claims figures, but either way it suggests reinsurers will absorb the lion’s share of United’s losses from Ian.

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Assuming the net loss estimate from United reflects the $1 billion gross loss figure provided, United would be retaining just 3.64% of the overall claims costs, or, assuming the net loss will rise by another 50% in line with the projected increase in claims volume, United would still be set to retain only 5.46% of losses, leaving its reinsurance panel to absorb some $945 million to $964 million of costs.

The company also added that it expects to incur about $16 million of reinstatement premiums that will be amortized over the remaining duration of its Core Catastrophe reinsurance program expiring May 31, 2023.

“Hurricane Ian was a devastating storm, and our primary focus today is on servicing our policyholders,” commented Brad Martz, President & Chief Financial Officer at United.

“There is a very high degree of uncertainty regarding the long-term economic implications of this event for our Company, and the entire industry,” he added. “The Company will be working closely with its reinsurers, service providers, and other key stakeholders to adjudicate losses accurately and timely.”

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