Validus: Preliminary NZ Losses Estimate
Bermuda reinsurer Validus Holdings, Ltd. today [Feb. 28] said it expects losses from the recent New Zealand earthquake [pictured] to range between $25 and $50 million.
On February 22, 2011, an earthquake with a magnitude of 6.3 on the Richter Scale struck the South Island of New Zealand near Christchurch causing significant loss of life and damage to property.
Given the magnitude and recent occurrence of this event, there is a lack of data available from industry participants and clients, resulting in significant uncertainty with respect to potential insured losses, and also with respect to Validus’ potential losses from this event.
However, based on current preliminary loss estimates from commercial catastrophe model vendors and Validus’ own internal analysis, the company currently anticipates that the total insured industry loss from the February 2011 New Zealand earthquake will be larger than the September 4, 2010 quake in the same area which measured 7.1 in magnitude.
Validus has taken note of the preliminary loss estimates from commercial catastrophe model vendors and conducted an analysis of its exposed insurance and reinsurance contracts as well as the outward reinsurance, retrocession and industry loss warranty protections purchased by the company. Based on this analysis, the company believes that for insured industry losses ranging from $6 billion to $7.5 billion. Validus currently expects its loss from the February 2011 New Zealand earthquake to be in the range of $25 million to $50 million.
Validus also noted the prevalence of worldwide events which it currently expects to give rise to insured losses in the first quarter of 2011, including the January floods in Australia, Cyclone Yasi in Australia, civil unrest in Northern Africa and the Middle East, damage to an offshore energy platform along with the Christchurch quake.
The company, which operates from offices on Par-La-Ville Road, said it does not currently expect its aggregate losses arising from these events to have a material impact on its shareholders’ equity and after considering these events, Validus continues to expect to report positive net operating income for the three months period ending March 31, 2011.
