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Insider in Full: Q4 earnings recap: Disclosed cat losses from Ian decrease, but Russia-Ukraine reserves creep upwards

A majority of carriers’ net losses in relation to Hurricane Ian are being revised downward, analysis by Insurance Insider of Q4 results has shown...

Public earnings disclosures tracked by this publication revealed that many more (re)insurers reduced their initial loss estimates from the major storm in their year-end financial reporting than increased them.

Of the 17 companies that reported changes to their Hurricane Ian loss estimates at Q4, 12 revised amounts downward and only five – UIHC, Hannover Re, Conduit, Fairfax and SiriusPoint – revised their estimates upward.

In aggregate, this group of 17 companies reported net losses from Ian totalling $6.4bn in their most recent quarterly results – a 12% drop from the sum of their initial estimates, which equalled $7.2bn.

A number of other carriers – such as Beazley and Hiscox – reported no changes between the publishing of their initial Hurricane Ian loss estimates and the publication of their year-end results; these companies have not been plotted on the chart above.

The data collected by this publication provides further evidence to support the general market sentiment that insured damages from the major storm will not be as severe as initial expectations.

The CFO of Floridian carrier HCI, for instance, noted on the company’s Q4 earnings call: “We're getting more comfortable that the impact of the storm is significantly less than expected.”

HCI’s Q4 estimate of its net Ian losses ($78mn) was unchanged from its initial estimate, but Harmsworth said last week that gross losses were down by roughly 15% to $825mn after evaluating claims development.

At an industry level, Aon’s Impact Forecasting unit has estimated a total insured loss of $53bn from the hurricane – at the top end of the range provided to this publication by canvassed London market professionals shortly after the storm, but at the lower end of the initial estimated ranges of several major risk modellers.

Ukraine losses creep up but remain low

Data logged from Q4 earnings has also given further insight into the development of insured losses resulting from Russia’s invasion of Ukraine.

While the total impact disclosed to date remains an order of magnitude smaller than the industry’s losses from Hurricane Ian, carriers’ estimate have crept higher as the war has continued.

Aggregate net losses recognised in the 2022 financial year by a cohort of 29 carriers tracked by Insurance Insider now equal $3.1bn – an increase of around $0.5bn, or 19%, on the equivalent tally at Q3.

Munich Re – whose Russia-Ukraine loss estimate grew from approximately EUR260mn ($274mn) for the first nine months of 2022 to EUR475mn ($500mn) at the year-end – reported the largest increase in absolute terms.

In relative terms, Lancashire – whose estimate tripled to $66mn from $22mn – recorded the largest increase.

One of the lines of business in which Lancashire was exposed to Russia’s invasion of Ukraine was aviation. This segment is expected to be a major influence on the ultimate quantum of market losses, given the significant number of related court cases which are currently active.

In February, for example, Lancashire – alongside Convex – was sued by aircraft lessor Carlyle Aviation Management in the UK High Court to recoup losses related to aircraft and other equipment stranded in Russia.

However, the pace at which these cases are proceeding means that the ultimate impact of the war on the industry is unlikely to become clear for several years.

Last week, a group of aviation insurers succeeded in their legal arguments for similar aviation cases to be tried together in the UK courts. In a hearing on Monday, a date of October 2024 was set for a 12-week trial to hear cases against carriers from lessors AerCap, Dubai Aerospace Enterprise and Falcon 2019.

In addition, a deal between Russian airline Aeroflot Group and AerCap – if executed in a manner consistent with global sanctions on Russian businesses – could result in the aviation market avoiding billions of dollars of possible insured losses.

This publication reported last month that talks between the parties have been ongoing for a number of months, and an outline of a deal has been thrashed out that would have the Russian airline take ownership of the planes, with funds flowing from Russia to the Dublin-headquartered leasing firm.


Insurance Insider delivers global wholesale, specialty, and (re)insurance Intelligence that enables you to act first. Redeem your complimentary 14-day trial for more premium content from Insurance Insider.

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