Bermuda-based Montpelier Re Holdings Ltd. announced that it estimates the net impact of Hurricane Katrina and New Orleans flood losses to be in the range of $450 to $675 million.
“These estimates are based on private industry insured loss estimates, inclusive of offshore energy losses, in the range of $30 to $40 billion,” said the bulletin.
Standard & Poor’s included Montpelier Re in its list of 10 insurers and reinsurers that it placed on a “Katrina” CreditWatch/Negative (See IJ Website, Sept.12).
Montpelier Re noted that so far it has received preliminary loss indications from only a few clients, “and no formal loss advices from any significant clients affected in the Louisiana/Mississippi region. Accordingly, the estimates are based mainly on loss indications to date, industry loss estimates, output from industry and proprietary models and a review of in-force contracts.”
The bulletin also indicated that it has been company policy to “purchase only a limited amount of retrocession protection, which is expected to be exhausted in the circumstances. Actual losses may vary materially from these estimates. The Company will revise these estimates of losses as important new information becomes available.”
Anthony Taylor, Chairman, President and CEO, commented: “This is a significant net loss for us, but nevertheless it remains consistent with the nature of our business plan and our capitalization remains strong. We expect upward price movements in affected classes for the balance of the year and a broader upward impact on renewal rates for next year, leading to increased underwriting opportunities which we remain well placed to pursue. We are currently assessing those opportunities and related capital requirements and the Board of Directors will take appropriate actions as the situation evolves. We have always said that we would flex our capital according to market conditions.”
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