Arch reports loss after third-quarter catastrophesReprints
Citing “a significant level of catastrophic event activity,” Pembroke, Bermuda-based Arch Capital Group Ltd. on Wednesday posted a 2017 third-quarter net loss of $52.8 million, a stunning drop from earnings of $247.4 million for the same period a year ago.
“This past quarter, natural catastrophes seriously impacted the industry, with three major hurricanes, large earthquakes in Mexico and other ongoing events that are likely to make 2017 one of the costliest, if not the costliest, for the insurers in history,” Constantine Iordanou, Arch chairman and CEO, said during a Thursday conference call with analysts.
Gross written premiums for the quarter totaled $1.6 billion, up 28.9% over a year ago, Arch said in a statement. The combined ratio deteriorated to 138.7% vs. last year’s figure of 95.7%.
Mark Lyons, executive vice president and chief financial officer, said during the call that hurricanes Harvey, Irma and Maria, which struck in August and September, along with the Mexican earthquakes, accounted for $348 million of pretax losses and $320 million of after-tax losses, with the balance reflecting minor adjustments to estimates on catastrophic events that happened in the first half of the year.
Hurricane Harvey accounted for 37% of the quarter’s catastrophe losses, Hurricane Irma accounted for 45% and Hurricane Maria accounted for 16%, Mr. Lyons said.
The third-quarter loss ratio included 46.3 points of current year catastrophic activity, Arch said, primarily related to hurricanes Harvey, Irma and Maria, compared with 4.1 points of catastrophic activity in the 2016 third quarter.
Net premiums earned by the reinsurance segment in the 2017 third quarter were 28.4% higher than a year ago, Arch said, and reflected the retroactive reinsurance contract and reinstatement premium impacts, as well as changes in net premiums written over the previous five quarters.
For the first nine months of the year, the company reported net income of $363 million, a decrease of 39.7% compared with $602.3 million for the 2016 period, according to the statement.