Arch Capital Group Ltd. said it expects an increase of approximately $160 million in its net loss estimate for Hurricane Ike, after reinsurance recoveries and net of reinstatement premiums.
The Bermuda-based insurer and reinsurer said, "The updated loss estimate is based on increased estimates of industry insured losses of $18 billion to $21 billion, as well as from additional information from clients reflecting larger losses than initial estimates.
Approximately two thirds of the increase resulted from the company's expected claims in the onshore and offshore energy lines of business."
In the third quarter of 2008, Arch reported estimated after-tax net losses related to Hurricanes Gustav and Ike of $133.0 million, after reinsurance recoveries and net of reinstatement premiums.
The company also said it expects 2008 fourth quarter aggregate pre-tax net unrealized and realized losses on its investment portfolio and equity in net losses of investment funds accounted for using the equity method of between $150 million and $160 million.
Arch said its investment portfolio is comprised "primarily of high-quality fixed income securities, with no collateralized debt obligations (CDO), collateralized loan obligations (CLO) or credit default swaps (CDS)."
Because of the two announced estimates, Arch said it expects to report after-tax operating income available for common shareholders in the range of $75 million to $90 million for the fourth quarter.
Arch said it expects to report its fourth quarter results on February 17.
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