XL Group Projects Loss from Sandy - Analyst Blog

By Zacks Equity Research,

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XL Group plc ( XL ) expects pretax loss from Superstorm Sandy to approximate $350 million, net of reinsurance and reinstatement premiums in the fourth quarter of 2012.

The Reinsurance segment will incur almost 60% of the estimated loss. Within the Reinsurance segment, Property Reinsurance will have to bear 80% of the loss while the remainder will be borne by Marine. Within the Insurance segment, Property will bear 85% of the loss while Specialty lines, including Marine, Fine Art and Specie, will bear 15% of the loss.

The company posted strong results in each of the three quarters in 2012 due to the absence of any major catastrophe events. However, the final quarter might show a different picture due to the impact of Hurricane Sandy. Loss modeling companies project the amount to be approximately $25 billion.

Each of the three reported quarters exhibited huge improvement in underwriting results, posting underwriting profits. Combined ratio also exhibited a huge year-over-year improvement.

The Zacks Consensus Estimate for fourth quarter and full year 2012 is currently pegged at 3 cents and $1.83 respectively. However, the final quarter is expected to fare better that the year-ago quarter, which suffered operating loss of 25 cents per share largely due to higher catastrophe losses, lower levels of positive prior-year loss development and higher tax expenses. Therefore, the current estimate represents a year-over-year improvement of 112.6%

Property and casualty insurer, Montpelier Re Holdings Ltd. ( MRH ), announced its expectations of pretax net loss from Superstorm Sandy in the fourth quarter of approximately $95 million, net of reinsurance recoveries and reinstatement premiums. ACE Limited ( ACE ) also expects loss from Superstorm Sandy to approximate $380 million after tax, net of reinsurance and including reinstatement premiums in the fourth quarter of 2012.

XL Group, ACE Limited and Montpelier, all carry a Zacks #3 Rank, translating into a short-term Hold rating.

ACE LIMITED (ACE): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

XL GROUP PLC (XL): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: ACE , MRH , XL

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