Flagstone Japan Estimate: $80 – $130 million
Flagstone Reinsurance Holdings today [Mar.30] announced that its preliminary estimate for losses related to the March 2011, earthquake and tsunami in the Tohoku region of Japan is expected to be between $80 to $130 million net of reinstatement premiums and retrocession. The Company’s estimated loss is based on an estimated industry loss of between $25 billion and $35 billion.
David Brown, Flagstone CEO, stated, “Flagstone’s retrocession strategy has been to buy protection for both extreme single events and for an accumulation of events during an underwriting year. As a result of this strategy, Flagstone has existing retrocessional protection that is effective in reducing our net exposure to both the Japanese and New Zealand losses, particularly at the higher end of our ranges. In addition, that protection is now effectively on a ‘next event’ basis, providing Flagstone with substantial protection against further events in 2011.”
Mr Brown added, “Due to the frequency of events so far in 2011, and as a result of current protection and reinsurance triggered by the previous events, Flagstone’s risk profile has been significantly reduced since December 31, 2010, from $272 million net event probable maximum loss (PML) to $162 million at the 1 in 100 return period, and from $326 million net to $204 million net event PML at the 1 in 250 return period.”
“As a result of Flagstone’s strong existing capital base and the substantial retrocessional protection already in place, we continue to maintain our solid financial position and a significant capital margin relative to the AM Best ‘A-’ rating. As the year progresses, we look forward to serving our clients’ needs and continuing to provide quality reinsurance capacity to the market,” Brown concluded.
Flagstone’s loss estimate is based on its proprietary modeling analysis, the assessment of individual treaties and client data, and third-party vendor models. These estimates may be further refined as additional information is received from cedants and there exists the risk for further revisions.
