A reinsurance subsidiary of Bermuda-based White Mountains Insurance Group has increased its 2005 gross catastrophe loss estimates by $203 million.
Folksamerica Reinsurance Company has set its reserves for offshore energy and marine exposures for Hurricanes Katrina and Rita at full policy limits, and increased its reserves on other exposures affected by the storms.
As a result of the announcement, A.M. Best has downgraded the subsidiary from "A" to "A-minus" and placed the rating under review with negative implications.
A total of $143 million of the loss will be ceded to Olympus Reinsurance Company, a sum that threatens to exhaust the bulk of that company's capital.
White Mountains said it is in advanced discussions with Olympus and its two largest shareholders regarding an arrangement to reimburse Olympus for up to $137 million of the ceded losses.
The payments totaling $140 million, which would include commission waivers, would bring Olympus' capital back to the level prior to this adverse development and the carrier will continue to provide retrocession cover for Folksamerica, the company said
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.