Reinsurance to pick up bulk of Universal’s $350-450m nat cat bill
Universal Insurance Holdings said on Oct. 10 that the bulk of the expected losses from Hurricane Irma will be picked up by reinsurance while noted that it is protected from a potential market hardening.
Gross losses for subsidiary Universal Property & Casualty Insurance Company (UPCIC) from Hurricane Irma in Florida and other Southeastern US states are expected at $350-450 million. However, in light of UPCIC's ‘substantial reinsurance program’ net pre-tax losses relating to Hurricane Irma are estimated at ‘only’ $35 million.
In addition, to the extent UPCIC experiences any additional reinsurance recoveries from its supplemental non-Florida reinsurance program, those recoveries would serve to further reduce its $35 million retention. At this estimated loss level, UPCIC has its full reinsurance tower of $2.65 billion available for any future events, according to the statement.
The company expects no impact to third quarter 2017 financial results from either Hurricane Harvey or Hurricane Maria.
Additionally, the company expects to incur little or no losses relating to Hurricane Nate.
Universal CEO Sean Downes commented: "We are thankful that our dedicated staff, disaster preparedness planning and conservative reinsurance program placed with strong reinsurance partners helped to limit the overall financial impact of these events.
“We also highlight our extensive second event coverage and our solid financial position as we move through the remainder of the 2017 hurricane season. Additionally, as we begin to look forward, it is important to note that over 60 percent of the UPCIC reinsurance capacity estimated to be impacted is part of multi-year deals with dedicated limit and pricing already determined for future years, which will serve to protect UPCIC in the event of a hardening reinsurance market.”
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