Home and motor insurers comment on hurricane losses

US home and auto insurers such as The Hartford and Allstate gave insight into their loss estimates from Hurricane Harvey and Irma.

The Hartford pointed to below $350 million of gross losses in Harvey and also may be less than $350 million of gross losses for Irma, according to a Credit Suisse analyst note.

The Hartford CFO, Beth Bombara, commented at the Barclays conference that the company does not expect to reach the first layer of reinsurance for Harvey, which points to less than $350 million of losses from Harvey. The motor and home insurer continues to assess Irma and whether Irma would reach the first layer of reinsurance, which extends up to $500 million gross losses. The Hartford has cat reinsurance per event which retains the first $350 million of losses and retains 25 percent of the next $150 million of losses, the first reinsurance layer.

Credit Suisse estimates that The Hartford's total losses from Harvey and Irma are around $550 million.

Though the Allstate CEO Tom Wilson did not provide any initial estimates for losses from Harvey or Irma, he made some qualitative observations about the two regions. Wilson noted that Harvey is likely to have proportionally more auto losses compared to Irma as residents had the mandatory evacuation before Irma, removing many of the cars from the flood zones.

All Florida home policies written by Allstate are out of the Castle Key subsidiary which has a $20 million retention and covers up to $658 million gross loss. Outside of this, Allstate’s nationwide per event reinsurance has a retention of $500 million with 95 percent of the gross losses up to $4.4 billion reinsured. For Florida private auto, Allstate has another reinsurance agreement that lowers the retention level to $300 million and ensures reinsurance protection for 2/3rd of losses above that.

Credit Suisse estimates that Allstate could have $1 billion of cat losses for the third quarter. This accounts for the preannounced $181 million of cat losses in July, $500 million retention for Harvey, and around $150 million for home and auto from Irma, and $150 million for other cat losses for Aug/Sept.

In Texas, Allstate has 13 percent market share in auto, 12 percent home, and 1.1 percent in commercial property. In Florida, Allstate has 10 percent market share in auto and 1.9 percent home.

Credit Suisse estimates $700 million losses for Progressive Corporation. The company could have $700 million of cat losses for Harvey and Irma. The analysts think auto losses (personal and commercial) could be $500 million for Harvey given Progressive's 9 percent market share in Texas and $50 million of losses for home ($50million retention on home losses per event).

For Irma, though Progressive has 14 percent market share in auto, Credit Suisse thinks many of these policies could be sub-standard (not comprehensive coverage) so flood losses might not be covered and due to the mandatory evacuation in Florida, fewer cars are exposed to losses for Irma. The analysts added that Progressive could have $100 million of auto losses and $50 million of home losses related to Irma.