US insurance coverage large Progressive has recorded a reinsurance restoration of $95.1 million underneath its per-occurrence protection after struggling important disaster losses in Might, whereas additionally saying its combination reinsurance is nearing attachment after the month.
In the course of the month of Might, Progressive stated that it incurred $722.1 million of internet disaster losses, or 12.3 loss ratio factors, associated to extreme storms primarily in Texas and the Midwest.
Nevertheless, that 12.3 level disaster pushed loss ratio was company-wide and driving dwelling simply how impactful Might has been, for extreme climate losses in america, Progressive’s property phase disaster loss ratio reached an enormous 173.4% for the month and its mixed ratio virtually 283%.
The insurer stated that three occasions, primarily impacting Texas and the Midwest, accounted for almost 60% of the disaster losses throughout the month.
In that property underwriting phase, Progressive stated it recorded a reinsurance recoverable of $95.1 million, together with losses and allotted loss adjustment bills.
That was underneath the agency’s incidence disaster reinsurance construction, which have retention thresholds of $200 million.
Notable for the insurance-linked securities (ILS) market maybe, Progressive additionally reported at the moment that, as of Might thirty first 2024, it’s “near reaching the annual retention thresholds underneath our 2024 disaster combination extra of loss contracts.”
As soon as these attachment thresholds are reached, for the mixture reinsurance, Progressive stated it has “reinsurance protection as much as $85 million for non-named storm property disaster losses.”
The newest Bonanza Re Ltd. (Series 2023-2) disaster bond, sponsored by Progressive-owned ARX Holding Company, offers $70 million of annual combination cowl for a variety of perils together with extreme thunderstorms, in addition to named storm occasions.
With a two part strategy, the non-named storm (so different perils, together with SCS) protection would connect at $525 million of losses to ARX Holdings and the Progressive House corporations, we perceive.
These combination cat bond notes characteristic a $20 million occasion deductible and a most contribution per-event of $180 million.
It’s necessary to notice that we have no idea how the Might disaster losses may need collected underneath the Bonanza Re 2023-2 notes, given the best way the protection is utilized and which Progressive linked corporations have been lined.
However, it does appear doable there might have been some erosion of that retention layer by the Might disaster loss occasions, so maybe elevating the chance for the notes considerably and this might, if it has eroded them, end in some marking down of the notes within the secondary markets. Once more, we now have to emphasize that we can’t be sure of this reality at this stage.
So, a really expensive Might for Progressive and this raises the prospects different main insurers may even recognise important property insurance coverage losses from that extreme climate from the month. This might turn into extra evident once we get Allstate’s newest month-to-month disaster loss disclosure within the coming weeks and the info from Progressive suggests different main insurers may have shouldered a big loss burden from final month as nicely.