Aspen (AHL) Likely To Incur $65 Million Q2 Catastrophe Loss

Aspen Insurance Holdings Ltd. (NYSE:AHL) has estimated its catastrophes loss for the second quarter of 2016 to be around $65 million.

Segment wise, the Reinsurance segment will bear 75% of the catastrophe loss and the Insurance segment will incur the remaining 25%. While 50% of the loss has been attributed to wildfires in Alberta, Canada, weather-related events in the United States have been held responsible for 36% catastrophe loss. The remaining 14% has been ascribed to multiple earthquakes, mainly in Kumamoto, Japan.

The Zacks Consensus Estimate for the second quarter is currently pegged at $1.20, which translates to a year-over-year increase of 20.7%. We expect the estimates to move down as analysts incorporate the impact of catastrophe loss.

In the last quarter too, Aspen Insurance had to incur a loss of $18.7 million net of reinsurance recoveries, which limited bottom-line growth. The company’s combined ratio also deteriorated 270 basis points year over year.

Aspen Insurance is a property and casualty insurer, which exposes it to losses from natural disasters. This in turn affects its underwriting results. We expect the catastrophe loss incurred to weigh on the company’s underwriting profitability and combined ratio in the second quarter.

Aspen Insurance is scheduled to report its second-quarter results on Jul 27. However, our proven model does not conclusively show that the company will beat on earnings. This is because though the company has a Zacks Rank #3 (Hold), its Earnings ESP of -4.17% makes surprise prediction difficult.

Other insurers too reported their cat loss estimates for the second quarter. While Kemper Corporation (NYSE:KMPR) estimates catastrophe loss to be around $52 million, Chubb Limited (NYSE:CB) anticipates catastrophe loss of approximately $315 million. Also, XL Group plc’s (NYSE:XL) loss estimates stand at $240 million for the same quarter.