Validus losses from Sandy may be $333m; Arch sees up to $240m

Make text smaller Make text larger

NEW YORK (Bloomberg News) — Validus Holdings Ltd., the reinsurer that acquired Flagstone Reinsurance Holdings SA, said costs from superstorm Sandy were about $333.1 million.

Flagstone’s losses from the storm are about $39.1 million, Bermuda-based Validus said Friday in a statement distributed by Business Wire.

Sandy struck the US East Coast in October, before the Flagstone purchase was completed on November 30.

Chairman and CEO Edward J. Noonan commented, “Hurricane Sandy was a large, complex loss event impacting our business across all of our operating segments and through multiple classes.

“As a leader in both the property catastrophe and marine classes, we see this event as being both unique and difficult for our clients to reserve.

“Our estimate of the net negative financial impact from Hurricane Sandy corresponds to an industry-wide insured market loss in excess of $25 billion, which appreciably exceeds industry loss estimates implied by the aggregate losses reported to us to date by our ceding clients.

“We have undertaken a thoughtful review of our property, marine and specialty exposures in the affected region in arriving at our initial estimate of the net negative financial impact from Hurricane Sandy, but would caution as noted below that all estimates should be considered preliminary at this point.”

Separate from these figures is the estimate of net negative financial impact from Hurricane Sandy to Flagstone Reinsurance Holdings, which on the same net basis as described above is $39.1 million, Validus said.

“The net negative financial impact to Flagstone will not impact Validus’ results of operations in the fourth quarter 2012 as the loss event took place prior to the date of Validus’ acquisition of Flagstone which was completed on November 30, 2012.”

Arch Capital Group on Friday announced that its preliminary estimate of losses relating to Storm Sandy ranges between $170 million and $240 million, net of reinsurance and the effects of reinstatement premiums.

The Bermuda-Based company said the preliminary loss estimate is based on projected industry insured losses ranging from $20 billion to $25 billion.

“Due to the unusual nature of the storm, including its broad scope, the number of insureds affected, the complexity of issues contributing to the losses and the preliminary nature of available information, there is substantial uncertainty regarding total covered losses for the insurance industry and the assumptions underlying the Company’s estimates relating to the event,” Arch said.

Make text smaller Make text larger

Take Our Poll