Bermuda-based Validus Holdings announced that it has increased its estimate of the net adverse effect from Hurricane Ike by approximately $70.1 million to a current total estimate of approximately $235.1 million. Validus said its new estimate is “is net of reinstatement premiums, reinsurance and other recoveries. This estimate is based on Validus’ evaluation of impacted contracts and information provided by customers and intermediaries. There is no change to Validus’ estimate related to Hurricane Gustav.
“The increased estimate arises primarily from property catastrophe excess of loss reinsurance coverage provided to insurance companies with exposure in the continental United States and to a lesser extent insurance companies with exposure to Gulf of Mexico offshore energy facilities,” the bulletin explained.
In addition Validus said that based on this revised information, it now “estimates that industry losses from Hurricane Ike are in the range of $18.0 billion – $21.0 billion, an increase from earlier estimates of between $15.0 billion- $17.0 billion.”
Validus Chairman and CEO Ed Noonan commented: “Hurricane Ike, which made landfall on September 13, 2008, is the third most costly windstorm in history and losses have continued to escalate for the industry. The financial effect on Validus from Hurricane Ike is now estimated at $235.1 million. As industry insured losses rise from Hurricane Ike, a disproportionate percent of the increase is borne by the reinsurance sector as more ceding companies attach excess reinsurance layers or trigger additional reinsurance recoveries from their catastrophe programs.
“We now expect to make recoveries under the Validus Reinsurance retrocessional program and have nearly exhausted our net retentions required before we begin to make recoveries from Talbot’s property reinsurance coverage. Despite the losses associated with Hurricane Ike, we expect to report significant underwriting profits for the 2008 year as a result of our global diversification.”
A compilation of the financial calculations relating to hurricanes Ike and Gustav may be obtained on the Validus web site at: www.validusre.bm.
Source: Validus Holdings, Ltd.
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