Chubb Provides Cat Loss Estimate (revised) - Analyst Blog
June 21 2011 - 10:11AM
Zacks
Property and casualty insurer
Chubb Corporation
(CB) has announced its estimate of catastrophe losses (cat losses)
for the months of April and May, based on property damages
resulting from cataclysmic weather conditions.
The company expects pre-tax cat losses in the range of $250 million
to $310 million in those two months. Chubb stated that its pre-tax
losses for May were about $75–$85 million, in addition to the
$175–$ 225 million catastrophe losses incurred during April, which
was due to storms in the southern states of the U.S. In the month
of May, the company was affected by unprecedented tornadoes.
Chubb’s geographic concentration exposes it to catastrophe losses.
Compared with 2009, the company witnessed less profitable results
in 2010 owing to a substantially higher impact of catastrophe
losses. Similarly, the more profitable results were recorded in
2009 compared with 2008 due to a significantly lower
catastrophe losses, partly offset by a lower amount of favorable
prior-year loss development. The impact of catastrophes accounted
for 570 basis points of the combined ratio in 2010 as against 80
basis points in 2009 and 510 basis points in 2008.
The catastrophe losses, incurred early during the year, will
expectedly drain Chubb’s second quarter 2011 earnings by 55–68
cents per share after tax.
Other insurers and reinsurers who suffered losses from the early
2011 catastrophe include companies like
Allstate
Corp. (ALL) and
Travelers Companies Inc.
(TRV). While Allstate anticipates net losses of $2.0 billion,
Travelers estimates April and May cat losses to range between $1.0
billion and $1.05 billion.
Chubb will provide all the details regarding catastrophe losses in
its second quarter earnings report, which is slated to be released
on July 21, 2011, after the market closes.
Experts predict that the April-May cat losses would cost about
$7.7–$12.5 billion to the industry. According to them, the insurers
overall have already incurred heavy cat loss, which is almost twice
the figure earlier predicted for full-year 2011. We expect the
market to harden as severe natural disasters this year are pushing
prices higher in the insurance industry after years of sharp
pricing declines.
(We are reissuing this article to correct a mistake. The
original article, issued earlier today, should no longer be relied
upon.)
ALLSTATE CORP (ALL): Free Stock Analysis Report
CHUBB CORP (CB): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
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