Flagstone Announces Australian Losses
Flagstone Reinsurance Holdings SA, which has its executive offices in Bermuda, announced yesterday [Feb.7] its loss estimate due to the flooding in Australia that occurred in December, 2010 [pictured], is expected to be $10 million, net of reinstatement premiums and retrocession.
In January, 2011, subsequent flooding occurred in large areas of Australia; and on February 3 Cyclone Yasi hit Northern Queensland, Australia; both events will be deemed separate from those in December 2010. Analysts anticipate the Australian disasters will be the costliest ever for reinsurers.
The 2011 events are expected to impact Flagstone’s first quarter 2011 financial results. Due to the timing and nature of these events, Flagstone is currently assessing its exposure and will provide a loss estimate when the assessment is concluded.
Additionally, due to the unprecedented number of events that occurred in New Zealand and Australia over the course of 2010, the company expects that aggregate covers will be triggered, incurring losses of $25 million for the fourth quarter of 2010, net of reinstatement premiums and retrocession. However, the company does expect to produce positive growth in diluted book value per share for the fourth quarter of 2010.
Flagstone’s loss estimates are based on its proprietary modeling analysis, the assessment of individual treaties and client data, and third-party vendor models.
The company is scheduled to release fourth quarter and full year 2010 results after the close of trading on Monday, February 14.
Established in Bermuda in 2005, Flagstone recently reincorporated in Luxembourg but its executive offices remain in Bermuda and it maintains an underwriting operation here.
Earlier this year international news agency Reuter cited banking and catastrophe modelling sources who said the Australian floods were likely to push reinsurers into losses greater than they had expected for both 2010 and this year. Bermuda reinsurer Partner Re has already announced it expects to sustain losses of between $25 and $35 million as a result of the Queensland flood.
