P&C insurers seeing catastrophe loss respite in Q4'21

Numerous multiline and property and casualty insurers recorded much lower catastrophe losses in the fourth quarter of 2021 than they experienced a quarter earlier.

The industry had taken massive catastrophe losses in the third quarter of 2021 due to Hurricane Ida and European floods.

Allstate tops losses list

The Allstate Corp. again had the largest catastrophe losses in the last quarter of 2021 at $528.0 million, versus a much higher $1.30 billion in the prior quarter.

The catastrophe losses of Axis Capital Holdings Ltd. and RenaissanceRe Holdings Ltd. were much lower on a sequential basis at $54.0 million and $7.8 million, respectively. Axis Capital logged catastrophe losses of $250.0 million in the previous quarter, while RenRe recorded $725.0 million.

Loss creep warning

Claims were "surprisingly benign" in the September-November 2021 period, Jefferies analyst Philip Kett said. His estimates suggest that natural catastrophe losses were 4.9x the 10-year average in December 2021, mainly driven by the Colorado wildfire and tornado outbreaks across the U.S.

Kett expects claims to be manageable for underwriters in the fourth quarter of 2021, as benign earlier months offset December's claims. But he warned of possible loss creep, noting that his 2021 insured loss estimate rose to $122.4 billion from $108.3 billion due to revised claims from Hurricane Ida, European floods and severe weather, droughts and floods in the U.S.

"Nevertheless, just because our estimates have risen and some industry forecasts have been revised up, this does not necessarily indicate that underwriters have set imprudent initial loss picks," the analyst said.

Rate hikes vs. losses

Chubb Ltd. recorded the second-highest catastrophe losses for the fourth quarter of 2021 at $275.0 million. CEO Evan Greenberg in an earnings call said the company experienced $2.4 billion of catastrophe losses in what was the industry's second-costliest year on record.

Chubb obtained "robust" rate increases, but they are "naturally slowing" as portfolios achieve or approach rate adequacy.

"At the same time, whether short- or long-tail exposure, the loss environment is anything but benign," the CEO said. "The level of rate increases remains well in excess of loss costs and I expect this trend to continue for some time."