AXIS Capital (AXS) Provides Q3 Catastrophe Loss Estimates

AXIS Capital Holdings Limited AXS estimates third-quarter 2020 catastrophe loss of $225-$255 million before income taxes or $190-$220 million, after tax. The loss can be attributed to hurricanes Laura and Sally, the Midwest derecho, wildfires across the West Coast of the United States, the Beirut explosion, and regional weather events in the United States. Both insurance and reinsurance segments will absorb the losses.

The Zacks Consensus Estimate for AXIS Capital’s third-quarter earnings is currently pegged at 28 cents, indicating a surge of 171.8% from the year-ago quarter reported figure.  We expect estimates to move south once analysts start incorporating loss into their numbers.

The third quarter of a year generally bears the brunt of catastrophes as the hurricane season typically starts in June and lasts through November during a year, gathering strength in August and September. In a report on Aug 5, 2020, Colorado State University stated that ‘hurricane activity will be about 190% of the average season’. There will be 24 named storms, including 12 hurricanes and six major hurricanes, per CSU. RMS, the world’s leading catastrophe risk solutions company, projects total insured losses from Hurricane Laura between $9 billion and $13 billion, while the total U.S. insurance and reinsurance industry losses from Hurricane Sally is estimated between $2 billion and $3.5 billion.

Being a property and casualty insurer, This Zacks Rank #3 (Hold) insurer has substantial exposure to losses from natural disasters, man-made catastrophes and other catastrophic events, which has been inducing volatility in its underwriting results. Catastrophe and weather-related losses, net of reinstatement premiums, amounted to $336 million in the first half of 2020, primarily due to the COVID-19 pandemic and other weather-related events.  Combined ratios deteriorated 1060 bps in the first half of 2020.

However, the company noted improved pricing across most insurance lines of business.

Shares of AXIS Capital have lost 23.6% year to date compared with the industry’s decline of 9.2%.



Q3 Catastrophe Loss Estimate by Other P&C Insurers

United Insurance Holdings Corp UIHC estimates a third-quarter 2020 catastrophe loss of $135 million before income taxes or $107 million after tax, net of expected reinsurance recoveries. The loss can be attributed to six new named windstorms (Tropical Storm Fay, Hurricane Hanna, Hurricane Isaias, Hurricane Laura, Hurricane Marco and Hurricane Sally) and other non-named windstorm catastrophe events.

RLI Corp RLI estimates third-quarter 2020 catastrophe loss of $35-$45 million before taxes, net of reinsurance. The loss can be attributed to Hurricane Hanna, Hurricane Isaias, Hurricane Laura and Hurricane Sally.

Arch Capital Group ACGL estimates third-quarter pre-tax net catastrophe losses of $190-$210 million across its property casualty insurance and reinsurance segments, net of reinsurance recoveries, and reinstatement premiums. The expected loss could be due to the exposure to catastrophic incidents that include hurricanes Isaias, Laura and Sally, the Derecho windstorm, California wildfires, and other minor global events in the third quarter.

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