Great-West Lifeco’s cat book facing possible C$100mn from California wildfires

By Chris Munro

Feb 11 - (The Insurer) - Great-West Lifeco has said its catastrophe book faces a maximum net loss of C$100mn ($70mn) from the California wildfires, although the likely impact is between C$10mn and C$50mn, while heightened property pricing following the blazes could present the company with “good opportunity” to grow.

In the group’s fourth quarter and full-year 2024 earnings release, Great-West Lifeco said the impacts of the 2025 California wildfires on its business remain under review.

“While we do expect to incur claims related to the ongoing wildfires in California, our maximum reinsurance loss exposure is C$100mn after tax, net of reinsurance premiums,” said Jon Nielsen, Great-West Lifeco’s executive vice president and CFO, during the firm’s quarterly earnings call.

“Our current loss estimate is between C$10mn and C$50mn after tax,” he added.

“While the size of our exposure to the wildfire markets makes it a manageable event for us, our hearts go out to all those whose lives have been devastated by the catastrophes,” Nielsen added.

Although the bulk of Great-West Lifeco’s operations are focused on life and health insurance, retirement and investment services, and asset management, the company also writes a portfolio of P&C reinsurance and retro business.

Most of the property catastrophe risk on its book is assumed through inwards retro business, with its participation “generally at significantly higher event or experience loss exposures than primary carriers and reinsurers”.

Alongside property cat business, Great-West Lifeco writes other non-life classes including motor, pet, third-party liability, unemployment and title insurance.

In a 2025 outlook accompanying its fourth quarter and full-year 2024 results, Great-West Lifeco said it expects property retrocessional pricing “to reduce somewhat in 2025 due to the lack of major loss activity in the past two years”.

“The company’s primary focus in the property catastrophe market for 2025 will be to continue to support the core client base with prudent attachment levels, restricted territorial scope and risk adjusted premiums,” it said.

During the earnings call, Nielsen noted that Great-West Lifeco has “deliberately reduced P&C catastrophe risk in our reinsurance business over the past two years”.

Great-West Lifeco’s president and CEO Paul Mahon added that “over the last number of years, we've moved further and further away from the risk”.

“That's kind of our mindset – we're providing good value, but we are making sure that we're looking after our risk profile,” Mahon said.

Jeff Poulin, executive vice president of reinsurance, explained that, as the property reinsurance market has hardened in recent years, “we’ve gone away from the risk”.

“We've taken the same amount of premium, but been further and further away from the risk.

“We've seen the market soften a little bit after two good years in the retrocession market. And as a result, we haven't deployed all our capacity at renewal. So we're being very risk-conscious and we're trying … to manage the portfolio the best way possible,” he said.

However, the impact of the California wildfires on the market could prompt Great-West Lifeco to make a renewed play in the space.

The wildfires are “definitely a major event”, said Poulin.

“It’s going to affect the market everywhere. I think some people were buying covers with reinstatements, and they’re already in the reinstatements, so they may be looking for more capacity.

“I think it's going to harden the market again, and there might be some good opportunity for the dry powder we kept at year end.”