Insurers estimate catastrophe losses in July-August updates

A barrage of natural catastrophes across Canada spiked insured losses in July and August, two insurers report.

Intact estimates its total catastrophe losses quarter-to-date at approximately $1.1 billion on a pre-tax basis and net of reinsurance, the company said in an Aug. 21 update on the first two months of its third quarter. The release noted that’s “well above expectations for a third quarter.”

And Definity estimated on Aug. 26 that catastrophe losses would have “a negative impact on operating income of approximately $150 million net of reinsurance recoveries…net of taxes and reinsurance.” The company said reinsurance recoveries include full utilization of the $25 million available under the company’s catastrophe aggregate treaty.

Both companies said the losses stem primarily from four severe weather events – torrential rainstorms in southern Ontario, wildfires in Jasper, Alta., a hailstorm in Calgary, and flooding in Quebec.

It’s not a routine practice for publicly traded corporations to issue preliminary updates or reports outside of scheduled fiscal quarterly or annual announcements.

NatCat aftermaths

Intact said it is working with thousands of customers who are recovering from significant damages stemming from the four weather events. The company said it would issue an update in early October should other significant catastrophe losses take place or if the loss amounts materially differ from the Aug. 21 estimate.

“Our organization continues to show operational and financial resiliency in the face of these unusually severe weather events, with strong underlying performance, a robust balance sheet and mid-teens operating ROE [return on equity]. We expect these extreme weather events to add further pressure to current market conditions,” said Charles Brindamour, CEO of Intact Financial Corporation.

Intact further said it’s deploying all its resources nationwide to help customers in affected areas and to expedite the claims process.

Definity, meanwhile, said it based its assessment on information received from customers to date and an analysis of exposures.

“The summer catastrophe season has been active and additional events may occur,” the company said in its release. “Given that the Q3 2024 catastrophe losses will be materially above our original expectation, we expect to provide an update for the full quarter during the first half of October.”

Rowan Saunders, Definity’s president and CEO, added the devastation to the communities illustrates the extent to which insureds are impacted by the effects of climate change.

“In these times, the immediate work of our catastrophe response teams to help our customers recover truly underscores our purpose…” he said.

Early estimates

Damages from secondary perils are top of mind for insurers writing coverages in Canada, Aviva Canada CEO Tracy Garrad told CU in an interview earlier this month. She noted the extensive impact of NatCats will effect the company’s bottom line in the third quarter.

“We do have reinsurance treaties in place for severity,” Garrad said. “It’s really too early to tell yet just what that severity is going to look like. It’s going to take a few more weeks for the emergent claims to pull through.”

Garrad noted preliminary estimates suggest the Canadian P&C insurance industry will pay roughly $1 billion for the Ontario flooding, more than $700 million for Jasper wildfire damage, and a Calgary hailstorm will cost around $1 billion. It’s too early to tell how much the Montreal flooding from Hurricane Debby will cost, though insurers have received 10 to 17 times the average amount of claims, Insurance Bureau of Canada reports.

Feature image by iStock/shaunl