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AIG counts the Q4 cost of catastrophe losses of up to US$800m
Written by staff reporter
AIG has been hit by an estimated US$750m - US$800m in catastrophe losses so far during Q4 2018, its chief executive officer has revealed. Despite the difficult start to the quarter, the company’s general insurance unit is on track to start 2019 “at a slight underwriting profit,” according to AIG chief executive Brian Duperreault, who was speaking at the Goldman Sachs US Financial Services Conference in New York.
Wildfires in California, net of reinsurance, will add between US$150m and US$175m to AIG’s net pretax losses for the fourth quarter, since the company has triggered its reinsurance coverage, Duperreault said. AIG expects its Validus Holdings unit - the reinsurer it acquired in July - to incur about a US$60m pretax loss for wildfires. The figures for catastrophe losses do not include December.
The insurance sector has been badly hit by some of the worst wildfires in Californian history which have ripped through the US state this year. In the city of Paradise alone, fires killed at least 85 people, with others still unaccounted for, and destroyed 14,000 homes in the region
Another insurer - Beazley - has also announced that it expects wildfire-related payouts from reinsurance to hit its bottom line to the tune of US$40m, while LA-based Farmers Insurance says it is dealing with more than 9,000 claims across the Camp Fire in Northern California and the Woolsey Fire in Southern California, with a potential claims value totalling US$2.1bn.
Earlier this week, Chubb estimated that it will incur around US$225m of pre-tax catastrophe losses attributable to the California wildfires over Q4 2018.