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Chubb Releases Q4 Global Catastrophe Loss Estimate of $505M

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Chubb LimitedCB recently reported net catastrophe loss estimates of about $585 million pretax or $505 million after tax, net of reinsurance including reinstatement premiums. The loss estimates comprise the previously announced loss forecasts aggregating $475 million pretax, stemming from the California wildfires and Hurricane Michael. The aforementioned net catastrophe loss estimates also include loss projection of $75 million pretax arising from other worldwide events including storms in Australia and Typhoon Trami in Japan. The insurer's fourth-quarter results will likely be affected by these losses.

Notably, the balance of about $35 million pretax is from loss development associated with natural catastrophes occurring in the first three quarters of 2018.

The net catastrophe loss estimates also include losses generated from the company's commercial and personal property and casualty insurance businesses and its reinsurance operations.

On Dec 6, 2018, catastrophe risk modelling firm AIR Worldwide predicted industry insured losses from Camp Fire in Northern California along with Woolsey fire in Southern California to range between $9 and $13 billion.

Additionally, in mid-November, catastrophe modeling firm Risk Management Solutions Inc. projected losses from the wildfires in the $9-$13 billion band, which will include property and auto damage, business interruption, additional living expenditure and contents loss.

Per Moody's estimates released in the Insurance Journal, the total insured losses (from the California wildfires) of property/casualty insurers and reinsurers can range between $10 billion and $15 billion. Moreover, according to Moody's, the insured losses are anticipated to reduce fourth-quarter earnings for primary insurers and reinsurers but will remain within the estimated levels.

Additionally, per the industry data provider CoreLogic, total losses resulting from the wildfires in Northern and Southern California can vary between $15 billion and $19 billion. With respect to losses emanating from Hurricane Michael, last December, reinsurance giant Munich Re envisioned the same totaling $10 billion.

In the same month, this Zacks Rank #4 (Sell) property and casualty insurer announced its preliminary net loss estimates of about $225 million pretax or $195 million after tax, net of reinsurance including reinstatement premiums. The loss can be attributed to the California wildfires. Meanwhile, the P&C insurer has provided loss estimates from Hurricane Michael to be between $100 million and $120 million. The company now assumes the same to be at the upper end of the guidance.

Chubb's status as a P&C insurer has made it fairly susceptible to loss from natural disasters, man-made catastrophes and other weather-oriented events. This has further rendered volatility to its underwriting results.

In the first nine months of 2018, this property and casualty (P&C) insurer suffered catastrophe losses of nearly $1 billion, noticeably lower than $2.3 billion incurred in the same period of 2017. However, with the incident of the California wildfires and other weather-related occurrences, the insurer's fourth-quarter results might be adversely impacted.

Shares of this P&C insurer have lost 12.9% in a year's time, wider than the industry 's decline of 7%.

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Arch Capital Group Ltd. ACGL initiated pre-tax gross catastrophe loss estimates of $110-$130 million, ensuing from Hurricane Michael and the California wildfire.

When it comes to California wildfires, Mercury General Corporation MCY has previously issued pre-tax gross catastrophe loss estimate of $253 million, originating from Camp Fire and Woolsey Fire.

Pertaining to the losses from Hurricane Michael, insurer RLI Corp. RLI anticipates cat loss between $22 million and $27 million, net of reinsurance.

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


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

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