SNL: Likely Q2 Catastrophes Losses Plentiful, but Less Than 2011

NU Online News Service, July 23, 3:38 p.m. EDT

Following the heavy catastrophe year of 2011, it is not surprising that the levels of second-quarter catastrophe losses taken by insurers look to be much less despite what has been called the third-costliest spring thunderstorm season inU.S.history.

An analysis by SNL Financial of publicly-traded insurance companies finds that compared to last year, expected second-quarter catastrophe losses will be far less than in 2011.

Nevertheless, the second three months of 2012 was not lacking of costly events.

Allstate Corp. estimates about $820 million in second-quarter pretax catastrophe losses from 30 events–far less than the $2 billion estimate it released at this time a year ago after tornadoes ripped through a large portion of the U.S., including Joplin, Mo., Tuscaloosa, Ala. and the many Plains States.

A total of 13 events during the 2012 second quarter have led Hartford Financial Services to predict about $190 million after-tax, or about $300 million pretax, in catastrophe losses. This is compared to $290 million in after-tax losses the insurer took during the second quarter last year from a dozen events. These losses tacked 18.2 points to the combined ratio for the company's commercial and consumer markets.

Chubb Corp., which releases second-quarter results on July 26 after the market closes, estimates pretax second-quarter losses of up to $240 million from primarily 13 hail and windstorm events. The Warren, N.J.-based insurer booked pretax catastrophe losses of $329 million a year ago.

In reporting second-quarter results, Travelers says catastrophe losses fell to $357 million after tax compared to $1.1 billion after tax in the prior year's second quarter. The difference in weather losses allowed Travelers to report second-quarter net income of $499 million compared to a net loss of $364 million a year ago.

Worldwide insured catastrophe losses totaled $12 billion during the first half of 2012, compared with $82 billion for the first half of 2011, according to Munich Re. Much of the damage in first-half 2012 occurred in the U.S., with insured losses of about $9.3 billion. Thunderstorm activity, including tornadoes and hail, accounted for about $8.8 billion of the U.S. losses, according to the Insurance Information Institute.