Assurant wildfire losses to “approach or slightly exceed” $150mn reinsurance retention

By Michael Loney

Feb 13 - (The Insurer) - Assurant has said its global housing segment’s losses from the California wildfires will “approach or slightly exceed” its $150mn per event catastrophe reinsurance program retention, which follows the company reporting $50.1mn of catastrophes in Q4.

Atlanta-based Assurant – which provides risk management solutions for the auto, lifestyle and housing protection sectors – said that its reportable catastrophes from the California wildfires “are expected to approach or slightly exceed our per event catastrophe reinsurance program retention of $150mn”.

On an investor call on Tuesday, CFO Keith Meier said the company would provide a further update in May “as we learn more and continue to settle claims”.

Assurant in its 10-Q for the third quarter in November had noted that it consolidated its main reinsurance purchases into a single placement date of April 2024.

Coverage was placed with more than 40 reinsurers that are all rated A- or better by AM Best.

The 2024 reinsurance premiums for the total program were estimated to be $191.4mn pre-tax as of 30 September 2024, compared to $207.2mn pre-tax for 2023, reflecting impacts from changing the timing of program placement in this initial year of transition to a single placement date, as well as favourable underlying rates from improved reinsurance market conditions.

The US per-occurrence catastrophe coverage includes a main reinsurance program providing $1.48bn of coverage in excess of a $150.0mn retention for a first event. Layers one through seven of the program allow for one automatic reinstatement.

On the investor call earlier this week, Meier commented “we are working through the placement of our catastrophe reinsurance program, which will be effective on April 1”.

“We expect a similar structure to our 2024 program, maintaining robust coverage at both the top and bottom end of our program. As the program terms are finalized, we will also get greater insights into our expected cat load for the year,” he said.

Assurant provided details of its wildfire losses along with its Q4 results.

Gaap net income increased 10 percent to $201.3mn for the quarter, primarily due to higher global housing segment earnings, lower impact of foreign exchange and lower restructuring costs.

The increase was partially offset by higher reportable catastrophes, lower global lifestyle results and higher net realised losses on investments.

Adjusted Ebitda increased 6 percent to $381.4mn compared to $360.8mn in Q4 2023.

For the fourth quarter, Assurant had $50.1mn of reportable catastrophes, up from $21.6mn in Q4 2033.

For the full year, reportable catastrophes were $247.0mn, up from $111.8mn in 2023.

Assurant had announced in January that it expected around $50mnm of reportable catastrophes for the fourth quarter 2024, which it said is more favourable than the early estimates provided on its Q3 call.

Reportable catastrophes were primarily within lender-placed in global housing and were largely driven by Hurricane Milton.