XL Capital may face $205m Chile costs
Filed under: Insurance
Bermuda insurer and reinsurer XL Capital said preliminary loss estimates for the Chilean Earthquake, pre-tax and net of reinsurance and reinstatement premium, range from $140m to $205m. It said $75m to $85m is attributable to the insurance segment and $65m to $120m to the reinsurance segment. This is another bitter blow to reinsurers and will add weight to the argument hat reinsurance rates must rise.
XL's preliminary loss estimates related to windstorm Xynthia, pre-tax and net of reinsurance and reinstatement premium, range from approximately $20m million to $25m, almost exclusively in reinsurance, the company said.
Market estimates
The Company's estimates correspond to expected insured market losses in the range of $6bn to $8bn for the earthquake in Chile and $1.5bn to $3bn for Windstorm Xynthia, XL said.XL's chief executive officer, Mike McGavick, said: "Based on our early reviews of losses on an industry and regional basis, we believe our estimated loss exposures demonstrate the effectiveness of the underwriting processes and risk management culture we have built at XL.
"In particular, we have prudently managed our net retentions across both the insurance and reinsurance segments."
Yeah but..
The reality is, companies such as XL have only had a year or two of good results after running into trouble in the past. They need to bolster their capital bases. Even the reinsurers who have weathered the storms (literally) in good shape, cannot afford these kids of hits this early in the year.Reinsurance rates will be nudged up as a result. Another major catastrophe or a hurricane season above average and rates will need a hike.
