Assurant reveals Hurricane Ian loss eroded two layers of its cat reassurance tower

U.S. specialty insurer Assurant, Inc. announced expected pre-tax catastrophe losses of $124 million for the third quarter of 2022, primarily related to Hurricane Ian, which includes the retention of $80 million per event and $35 million in reinsurance premiums to restore up to the third layer of its US catastrophe reinsurance program.

In July, Assurant completed its mid-year property and casualty reinsurance renewal, securing $1.16 billion of protection exceeding a retention of $80 million for a first event, with retention dropping to $55 million for a second and a third event.

Announcing its preliminary third-quarter financial results, the global business services company said it expects to incur reportable cat losses of $124 million for the quarter, primarily due to Hurricane Ian.

Above the $80 million pretax-per-event retention of its U.S. cat reinsurance tower, which you can see below, is a layer one of $30 million and a layer two of $50 million, both of which were eroded when the company confirmed the losses are in the third layer, though it’s unclear by how much. The third layer covers 50% of losses from $160 million to $235 million.

Additionally, with losses in layer three, this suggests that Ian has also consumed some of the company’s multi-year reinsurance protection, which covers 67% of layers three through six.

Stratumn, by SIA Partners

It’s unclear exactly where Assurant’s reinsurance recoveries from the event will fall, but it appears to be somewhere above the top of layer two, so $80 million, and up to $155 million, depending on how far into the event’s third layer of coverage losses is over.

It’s also likely that Assurant has also tapped its reinsurance backed by the Florida Hurricane Catastrophe Fund (FHCF), which, after an $86 million retention, covers 90% of losses up to $200 million.

Combined with participation in the FCHF, Assurant’s US cat reinsurance program provides gross loss protection in Florida of up to approximately $1.34 billion.

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