US property & casualty insurers catastrophe losses in Q3 2023

The Allstate and Liberty Mutual Holding had the highest Q3 2023 catastrophe losses among US property and casualty insurers, with both topping the $1 billion plateau, according to S&P Global Market Intelligence.

Severe weather events, such as Hurricane Idalia on Florida’s Gulf Coast, convective storms in the Midwest and wildfires on Maui were the driving factors in the quarter’s cat loss reports.

There is no doubt that the first quarter of the U.S. insurance industry will be a costly one. The insurance industry is struggling to adapt to a new normal in which losses fueled by climate change are now regularly exceeding $100 bn a year.

Insured losses from natural disasters hit about $120 bn in 2022, most of which was weather related, according to data compiled by Munich Re.

Q1 2023 severe weather insured losses should come in at a range of $7 bn to $9.5 bn of insured severe thunderstorm storm losses from hail, tornado, and thunderstorm wind gusts.

Allstate booked $1.18 billion in cat losses, up from $763 million a year ago, but significantly down from the $2.70 billion booked in the second quarter.

Source: S&P Global Market Intelligence

Allstate said in its third-quarter earnings release that the cat losses were primarily from the Maui wildfires and 48 wind-hail events, including a hailstorm that hit Texas in September.

Allstate’s cat losses for the first nine months of 2023 were $5.57 billion, the highest level for the period in the company’s history, compared with $2.33 billion in the year-ago period. An increase in severe storms is the driving force behind those higher losses.

Liberty Mutual had $1.11 billion in third-quarter cat losses, down year over year from $1.39 billion. The company said in its third-quarter discussion of financial results that its cat losses were “higher than expected” and were driven by “several hail and wind-related events that resulted in significantly elevated severity” in the third quarter versus the year-ago quarter.

The Travelers’ cat losses rose 66% year over year to $850 million from $512 million, third highest in the analysis. The losses were spawned by weather activity, specifically related to wind and hail events.

The severe storms in the Midwest also impacted The Hanover Insurance Group Inc. as cat losses totaled $195.8 million, up from $90.1 million last year. The company said in its earnings release that hail and wind damage represented the majority of reported losses and primarily impacted its personal lines segment.

Chubb Ltd., The Progressive Corp., American International Group Inc. and Arch Capital Group Ltd. all logged lower cat losses compared with the third quarter of 2022 when Hurricane Ian tore through Florida.

Arch Capital had the steepest decrease, percentage-wise, among those companies as losses fell 67.3% to $180 million from $550 million. Progressive, which was hit hard by Ian, saw a 47% decrease in its cat losses in the third quarter to $470.8 million from $883.2 million in the same period last year, and $1.02 billion in the second quarter.

by Tom Jacobs – S&P Global Intelligence analyst