Bermuda-based Everest Re Group Ltd. announced that net pre-tax catastrophe loss impacts arising from third quarter events are expected to be significant, with the principal components being $638 million attributable to Hurricane Katrina and $54 million attributable to Hurricane Rita.
There were also several events of a lesser magnitude that contributed an additional $58 million of losses in the quarter. The company noted the estimated net after-tax impact of all of these events is approximately $598 million. All of these estimates include the effect of re-instatement premiums.
The company’s view of its estimate of losses from these events, and in particular Hurricane Katrina and Hurricane Rita, remains preliminary and, as noted in the company’s Sept. 13, 2005 report, is subject to considerable uncertainty. Focusing on Hurricane Katrina, the unprecedented magnitude and nature of the loss, the continuing lack of precise information from ceding companies regarding exposures, the complexities surrounding claim adjusting and settlement activities and the potential related regulatory and legal issues, all contribute to this uncertainty.
The company’s current estimate for these events is based on underwriter analysis and judgments, client input and discussion, event modeling and profiling of exposed limits. The company expects it will be several months before relative clarity emerges with respect to its ceding companies’ underlying losses.
Everest Re Group noted that although the impact of these catastrophes will be partly mitigated by its underlying non-catastrophe results, the company anticipates a significant after-tax loss for the third quarter. The company further notes that shareholders equity for the period ending Sept. 30, 2005 will be slightly below that of year end 2004 as a result of this loss. However, barring any further unusual loss activity, the company anticipates positive full year earnings.
Joseph Taranto, Everest Re’s chairman and CEO commented, “Hurricane Katrina, as one of the most devastating weather catastrophes in United States history, had and will continue to have dramatic and far reaching impacts on the lives of its victims. We at Everest extend our sympathies to those affected as we turn our attention to dealing with the impact of these events and orienting our strategies to a post-Katrina world.”
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