Allstate Reports Significant Catastrophe Losses for January
U.S. primary insurer Allstate has announced its estimated catastrophe losses for January at an eye-popping $1.08 billion, which translates to approximately $849 million after tax. This figure comes after considering an impressive $1.40 billion in estimated reinsurance recoveries specifically linked to the devastating California wildfires.
The losses incurred in January are attributed to a trio of catastrophic events, with around $1.07 billion stemming directly from the wildfires in California. This estimate encompasses not just the direct losses but also includes reinsurance reinstatement premiums along with a projected assessment from the California FAIR Plan.
Earlier in the month, Allstate had already projected its gross losses from the Los Angeles wildfires at an alarming $2 billion. After accounting for $900 million in reinsurance recoveries under its per-occurrence tower, the company anticipated a net loss of approximately $1.1 billion from the catastrophic event. Notably, Allstate pointed out that for every additional $100 million in gross losses, the net loss would only increase by $10 million, suggesting that further recoveries could be possible if the gross loss continues to rise, which appears to be the case.
Looking ahead, in May 2024, Allstate took proactive measures by raising the cap on its Nationwide excess catastrophe reinsurance tower for the year to just over $7.9 billion, following retentions that range between $500 million and $1 billion.
In a related development, executives from Bermuda-based Conduit Re have underscored the profound impact of the California wildfires on the broader re/insurance market. They highlighted the potential of this catastrophic event to halt the ongoing decline in rates, particularly as key renewals approach. During a briefing that followed the release of the firm’s 2024 financial results, Neil Eckhart, Executive Chairman, characterized the California wildfire event as one of the four most severe incidents he has encountered throughout his career. He compared its significance to that of Hurricane Andrew, Hurricane Katrina, and the tragic events of the World Trade Center attacks.
Source: Reinsurance News
