NU Online News Service, June 13, 11:10 a.m. EDT
Cincinnati Financial Corporation says second-quarter losses from April and May U.S. storms will be between $240 million and $290 million.
The total is net of reinsurance and includes previously announced April loss estimates of between $155 million and $190 million.
Steven J. Johnston, president and chief executive officer, says, “Much of the United States continued to see a higher than usual level of spring storm activity, raising our catastrophe losses well above our historical second-quarter average.”
He adds, “The estimated impact of April plus May 2011 catastrophe losses on our second-quarter loss ratio would be approximately 33 to 40 percentage points, net of reinsurance and based on estimated earned premiums for the full second quarter. The mix of total April and May net catastrophe losses was split between commercial lines and personal lines, at approximately 50 percent each, roughly in line with our 10-year annual average.”
Johnston notes that over the past 10 years, the impact of catastrophes on the second-quarter loss ratio has averaged 8.5 percentage points.
He also says the company expects to recover “significant amounts” from its reinsurers. “Our reinsurance program provided coverage for our losses above $45 million from a single catastrophe event,” he says. “Policyholder losses exceeded that level for both the May tornado and hail event and the late April tornado event.”
Tornado-spawning spring storms in the U.S. have caused extensive damage in multiple states. AIR Worldwide says it expects between $4 billion and $7 billion in insured losses for storms that occurred from May 20 to May 27.
Risk Management Solutions says storms from April 25-28 are expected to cause between $3.5 billion and $6 billion.