Alleghany Estimates Q4 Catastrophe Loss Of Nearly $75M
Zacks Investment Research | Nov 20, 2016 09:30PM ET
Alleghany Corporation (NYSE:Y) recently unveiled its estimated pre-tax catastrophe loss levels for the fourth quarter of 2016. The company projects fourth-quarter catastrophe loss to be less than million $75 million, net of reinsurance and reinstatement premiums. The expected losses primarily account for the impact of Hurricane Matthew.
The cat loss estimate comprises losses from the company’s subsidiaries – Transatlantic Holdings, Inc. and RSUI Group, Inc. Both these units are likely to have an equal contribution to the total loss.
As a property and casualty insurer, Alleghany Corporation is exposed to losses from natural disasters, which in turn, affects its underwriting results. We expect the cat loss incurred to weigh on the insurer’s underwriting profitability and combined ratio in the fourth quarter.
In the third quarter, the insurer’s underwriting results improved due to a favorable catastrophe environment. Underwriting profit increased 17.8% and combined ratio remained flat, both on a year-over-year basis. Catastrophe losses, net of reinsurance, were $32.1 million down 12.3% year over year.
The Zacks Consensus Estimate for Alleghany Corporation’s fourth-quarter earnings is currently pegged at $5.78, translating into a year-over-year decrease of 31.5%. We expect the estimate to move down as analysts incorporate the impact of catastrophe loss.
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