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(Reuters) – Property/casualty insurer and reinsurer Lancashire Holdings Ltd. is not exposed to the first $40 million of windstorm reinsurance claims and does not expect to pay out huge amounts from Tropical Storm Harvey, its head of investor relations said.
The most powerful hurricane to hit Texas in more than 50 years has caused deaths, forced tens of thousands of people to leave deluged homes and caused damage estimated at tens of billions of dollars, making it one of the costliest U.S. natural disasters.
Lancashire, which writes policies for heavy-duty assets such as oil rigs, ships and aircrafts, said its exposure in Texas was that of a windstorm account, which excludes floods -- the biggest cause of damage in the state.
The company’s cedents also have to bear losses of up to $40 million before their reinsurance policies kick in.
“It has to be a very big loss before we even start paying losses. Very difficult to say if that potential is there or not,” Jonny Creagh-Coen told Reuters. “For Lancashire, we don’t see a big thing here.”
He added that the Lloyd's of London insurer and reinsurer had a retrocession cover of about $200 million.
Air Worldwide estimates insured losses from Harvey’s wind and storm surge at between $1.2 billion and $2.3 billion. That figure does not include flooding.
Wall Street analysts have estimated total insured losses as high as $20 billion.
Barrie Cornes, insurance analyst at Panmure Gordon estimates a £200 million ($258 million) net loss for Lancashire from the storm. Mr. Creagh-Coen rejected the figure.
“Most of the area is still in blackout (so) there are a couple of things we need to clarify. But we are pretty comfortable on where we sit in this claim,” he said.
Lancashire, the third-biggest Lloyd’s of London listed insurer by market capitalization, also writes business via its Cathedral unit, which gives it access to the Lloyd's market.
“On their (Cathedral's) treaty account, it’s difficult to say if there will be any claims at all because there isn’t a big wind exposure here, it's more of flood,” Mr. Creagh-Coen said.
Insured losses resulting from Tropical Storm Harvey’s winds and storm surge in Texas will range from $1.2 billion to $2.3 billion, not including the impact of ongoing rain and potentially record flooding from Harvey’s unprecedented precipitation, according to catastrophe modeling firm AIR Worldwide, a Verisk Analytics Inc. business.