Fitch Ratings Inc. on Friday revised its outlook for XL Group Ltd.’s insurance units to negative from stable, following the insurer and reinsurer’s recently announced $1.04 billion loss for the third quarter.
Chicago-based Fitch affirmed XL’s A+ financial strength rating but said “the outlook revision to negative reflects a meaningful deterioration in capitalization” following natural catastrophe losses in the third-quarter.
XL, like many insurers, announced significant claims from hurricanes Harvey, Irma and Maria, among other catastrophe losses in the quarter. XL estimates it will incur pre-tax net catastrophe losses in the third quarter of $1.48 billion.
The ratings agency added that “the negative outlook also reflects the potential for upward revisions to the company's current loss estimates, given the uncertainty in estimating losses for the recent catastrophe events, as well as the possibility of additional significant loss events occurring.”
Bermuda-based insurer and reinsurer XL Group Ltd. said that it is likely to record a net catastrophe loss of nearly $1.5 billion for the third quarter, largely due to outlays for hurricane claims, The Royal Gazette reported. Hurricanes Harvey, Irma and Maria accounted for more than $1.3 billion of the loss. The three storms contributed approximately 25%, 40% and 25%, respectively, to the reinsurer's loss, with 10% related to other catastrophes such as the Mexican earthquakes and typhoon Hato. The net loss is almost evenly split between XL's insurance and reinsurance segments.