XL Group plc
) provided its estimates for a loss from catastrophes for the
second quarter. According to the company, pretax loss from
catastrophes in the second quarter of 2013, net of reinsurance
and reinstatement premiums, will likely be approximately $135
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The Insurance segment of XL Group will incur almost 55% of the
estimated loss, while Reinsurance will incur the remaining 45%.
Losses from floods in Europe, Argentina and Canada and tornadoes
and hailstorms in the United States accounted for the preliminary
loss estimate. Of these events, floods in Europe comprised nearly
50% of the estimated loss.
Validus Holdings Ltd
) expects to record a catastrophe loss of $69.6 million in the
second quarter of 2013, resulting from heavy floods in Central
Europe. Another insurer,
The Chubb Corporation
) expects after-tax cat loss to be $156 million or 60 cents per
share in the second quarter. Chubb's pre-tax cat loss estimate of
$240 million includes $175 million from catastrophes in the
United States, largely stemming from severe storms in central
U.S. and $65 million from storms and floods in southern Alberta,
According to Impact Forecasting, industry loss from the European
flooding is estimated to approximate $5.3 billion. It also
projected combined economic losses to be as much as $22 billion.
In addition, reinsurer Munich Re projected that the industry
would incur $3.9 billion in insured losses due to the European
While Impact Forecasting projected total economic losses from
flooding in Canada to be approximately $3.8 billion, preliminary
insured loss is expected to be $1.0 billion. Impact Forecasting
is the catastrophe model development center of excellence at Aon
Benfield. Aon Benfield in turn is the global reinsurance
intermediary and capital advisor of
In the last reported quarter, XL Group's earnings per share
breezed past the Zacks Consensus Estimate by 38.8% and surged
78.8% year over year. The outperformance was fueled by improved
underwriting results attributable to lower levels of catastrophe
and large risk losses, along with higher affiliate earnings.
Prudent underwriting practices helped XL Group to narrow
underwriting loss and improve the combined ratio.
However, the second quarter will likely face the brunt of
catastrophes, which would weigh on its underwriting results as
well as the bottom line. The Zacks Consensus Estimate for the
second quarter is pegged at 77 cents.
XL Group carries a Zacks Rank #3 (Hold).