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Zurich Insurance Group Ltd. on Thursday said it will see net catastrophe losses of approximately $620 million for the third quarter of 2017 from hurricanes Harvey, Irma and Maria, but they will not impact financial strength.
The company joins a laundry list of insurers and reinsurers that have reported nine- and 10-figure losses related to the extraordinary string of natural catastrophes in September and October, which some observers say may ultimately generate $100 billion in insured industry losses.
Losses for the Swiss insurer’s property/casualty business are expected to be approximately $700 million net of reinsurance and before taxes, Zurich said in its statement, adding that “final loss assessment will take time to complete due to the nature of the events.”
In addition, Zurich’s Farmers Re division is expected to see losses of $17 million net of reinsurance and before taxes from Harvey, Irma and Maria. Zurich said the third quarter saw a number of smaller events as well, but said financial strength will not be hurt.
“The losses are not expected to have a material impact on the group’s overall financial strength and capital flexibility,” the company said, adding it does not expect to incur any reinstatement costs for reinsurance in relation to the third-quarter events.
“While significant, these events have demonstrated the effectiveness of our underwriting and the improvements made in our reinsurance programs over the past year, which have ensured that the overall losses remain well within our overall risk tolerance,” group CEO Mario Greco said in the statement. “Our thoughts and best wishes go out to those affected by these tragic events.”
Analysts at Morgan Stanley said that reinsurers need to tap into alternative capital instead of raising equity to help them deal with losses from hurricanes Harvey and Irma, Artemis.bm reported. Reinsurers may need to move quickly, as "magnitude and duration of a potential upturn could be muted by the availability of ample alternative capital," the analysts said.