Selective Predicts 3Q Cat Loss - Analyst Blog
October 14 2011 - 12:13PM
Zacks
Yesterday, property and casualty insurer Selective
Insurance Group, Inc. (SIGI) declared a preliminary
pre-tax catastrophe loss (cat loss) estimate of $70 million, to be
reflected in its third quarter 2011 results. The losses which
have been calculated net of reinsurance recoveries mainly emanated
from Hurricane Irene and six other catastrophes.
In the previous quarter Selective incurred $38 million in
weather related losses almost half of what is expected in this
quarter.
Other property and casualty insurers who suffered from bad
weather during the third quarter include Assurant
Inc. (AIZ), The Chubb
Corp. (CB), W. R. Berkley
Corp. (WRB) and Tower Group
Inc. (TWGP). While Assurant forecasts a
pre-tax cat loss of $80 million to $85 million, Chubb sees a
significantly high catastrophe loss of $400 million to $475 million
pre-tax. Besides, both Berkley and Tower expect an earnings hit of
$50 – $60 million.
According to the Insurance Information Institute, the property
and casualty industry was hit hard during the first half of the
year, as profitability suffered greatly amid high cat losses. In
the third quarter, hurricane Irene along with other catastrophes is
estimated to have caused insured losses of $3 billion-$4 billion to
the industry.
Year-to-date, weather related losses for the industry are
expected to trend above $25 billion, up $14.1 billion compared with
the cat losses incurred in first-half 2010 and about thrice the
average of $7.7 billion for first-half catastrophe losses
during the past ten years.
However, the only silver lining under the circumstances is that
the record high losses are gradually hardening commercial lines
pricing. Also, the recent market surveys by the CIAB (Council of
Insurance Agents and Brokers) and Market Scout have indicated that
the moderation of declining commercial lines pricing is
accelerating, while select commercial lines pricing is witnessing
rate increases in certain lines.
Despite cat losses we expect Selective to report good results as
the company is benefiting from favorable pricing in both its
business lines, Commercial as well as Personal. Along with
improvement in pricing, the company is also witnessing positive
audit and endorsement, which indicate an improving economy.
ASSURANT INC (AIZ): Free Stock Analysis Report
CHUBB CORP (CB): Free Stock Analysis Report
SELECT INS GRP (SIGI): Free Stock Analysis Report
TOWER GROUP INC (TWGP): Free Stock Analysis Report
BERKLEY (WR) CP (WRB): Free Stock Analysis Report
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