Cincinnati Financial Corp. says it expects a $25 million to $35 million loss to be recorded in the fourth quarter thanks to claims generated by Superstorm Sandy.
The insurer of homes, autos and businesses says about two-thirds of the expected pretax catastrophe loss will come from the commercial lines segment.
President and CEO Steven J. Johnston says the effect of these losses on the company’s combined ratio will be about three times higher than its historical 10-year average of 1.1 points for the fourth quarter, provided that Cincinnati Insurance Co. experiences no additional effects from Sandy during the last quarter of 2012.
About 60 percent of claims from Sandy originate from Cleveland, Ohio and about 20 percent are from Pennsylvania, says the Cincinnati-based insurer. Claims were from wind damage, leaking roofs, and clogged drains.
Sandy made landfall in Southern New Jersey before heading inland and up toward Maine. Most estimates have indicated a majority of insured losses occurred in New Jersey and New York. Catastrophe modelers have provided a wide range of predicted insured losses. Eqecat says losses will be $10 billion to $20 billion. AIR Worldwide just updated its expected range of insured losses from the storm to between $16 billion and $22 billion. Risk Management Solutions says insured losses could reach $25 billion.
Johnston says Cincinnati Insurance has the capital strength to absorb the losses.
Yesterday reinsurer Swiss Re said Sandy could cause the company $900 million in pretax catastrophe losses.
Ohio’s Progressive Corp. says it sustained catastrophe losses of about $55 million in October due to Superstorm Sandy.
Tower Group says it expects an after-tax net loss from Superstorm Sandy of between $55 million and $68 million in the fourth quarter.