Partner Re To Class Floods As Separate Events
Partner Re, the leading Bermuda-based reinsurer, said late Monday [Jan. 31] that massive flooding in Australia will be categorised as at least two separate events for insurance purposes because the catastrophe hit during 2010 and 2011.
PartnerRe estimated that the Queensland flooding which began in December 2010 [pictured] will trigger losses of $25 million to $35 million, before tax. The Australian flooding started soon after a large earthquake caused widespread damage in New Zealand.
The combination of heavy losses from such catastrophes in the region during 2010 means PartnerRe will be hit with a $45 million charge from an “aggregate cover” it wrote. That will be recorded in fourth quarter results, the reinsurer added.
“Large areas of Australia continue to experience flooding and the Company expects these floods will cause a separate event or events that will affect first quarter 2011 results,” PartnerRe said in a statement. “The company is currently assessing its exposure to the January, 2011 event or events and will provide an estimate of the total impact of the flooding in Australia when this assessment is completed.”
Earlier this month analysts predicted insured losses resulting from the Australian floods could top $6 billion — and would likely impact on earnings estimates for Bermuda reinsurers.
PartnerRe Ltd. also said yesterday it expects to see a 16 percent decline in its renewable premium base at January 1 renewals.
The reinsurer said it expects to write and bind about $1.8 billion of nonlife treaty premium. The renewal information does not include US agriculture, which renews later in the first quarter. In addition, about $50 million of expected written premium is still in progress.
The company renews about 55 percent of its total annual nonlife treaty business on January 1. The remainder is comprised of treaty business that renews at other times during the year. In addition to treaty business, the company writes approximately $430 million of facultative business, which renews through the year.
“Overall, this is an acceptable result for the January 1 renewal, in light of current market conditions, and reflects some repositioning of the portfolio on business that was previously written by Paris Re,” Costas Miranthis, president and chief executive officer, said in a statement.
He said the company was pleased that despite the price declines in the market, “we were able to maintain the overall technical profitability of our portfolio by retaining the business with better risk adjusted returns.”
Equities research analysts at Wells Fargo & Co. downgraded shares of Partner Re from an “outperform” rating to a “market perform” rating in a research note to investors last week.
Separately, analysts at Janney Montgomery Scott downgraded shares of PartnerRe from a “buy” rating to a “neutral” rating in a research note to investors on January 11.
