Sandy Losses Firm Up

[twacowfca]

AIG reports$1.5B gross losses from Sandy.  Most of their reinsurance coverage will not attach. Nevertheless, their net, post tax losses should be around $900M.  Travelers gross loss is estimated to be @ $1.1B with net losses around $650M.  Both companies retained most of their coverage, and very little of their coverage was ceded to reinsurers that will attach at those loss levels.  However, much of FM Global' losses will be covered by reinsurance as will the NY Metro Transit Auth's losses.

 

Bottom line for reinsurers: sizable losses for those with exposure at lower attachment points.  Relatively low losses for reinsurers with coverage at higher attachment points.

 

Allstate estimates auto losses of $500M.  Geico's losses should be about that too.

 

All in all, this looks like an "earnings event" (meaning losses that would probably not exceed one quarter's profits) for most reinsurers, rather than a "capital" event (a much bigger loss).  The impact on primary insurers will be variable, larger for companies with coverage concentrated in the North East, smaller for others.  Larger for companies with D&F coverage there; smaller for reinsurers in general.  :)

[nwoodman]

Thanks for this. Would you care to speculate the likely impact for LRE or Odyssey Re? Thanks in advance