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US insured cat losses estimated at $4bn+ in Q2: Goldman Sachs

11th July 2022 - Author: Matt Sheehan

Analysts at Goldman Sachs have estimated that US insured losses from catastrophes in the second quarter of the year could be more than $4 billion.

At this level, Q2 losses would be around 40% of the 10-year average of $11.1 billion for US seasonal catastrophes in that quarter.

While the catastrophe environment in the US was benign in Q2, Goldman Sachs notes that Canada experienced significant losses from a derecho in late May that impacted densely populated areas around Toronto, Montreal & Quebec City.

Outside of North America, the most notable event was flooding in South Africa that is estimated to have caused more than $3 billion economic losses between two events, and flooding and landslides in China, economic losses from which are estimated at more than $1.5 billion.

Although Goldman Sachs expects catastrophe experience to be below normal levels this quarter, it does warn that severe weather events for Hail and Wind have been above 2021 levels during Q1 and Q2 so far this year.

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Additionally, Tornado activity was roughly in line with the multi-year average.

Some company’s called out non-cat weather as being more benign in the year ago quarter, and analysts expect this quarter to be more in line with a normal expectation or potentially a bit higher than normal.

Considering that consensus estimates are anticipating loss ratio improvement YoY driven by pricing action in excess of loss cost despite higher inflation, this is seen as a risk, and Goldman Sachs believes that it could drive less loss ratio improvement YoY than is anticipated.

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