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Ace, Montpelier Re Unveil Sandy Loss Estimates; Ace Cuts 2012 Operating Profit View

Source: Dow Jones

Posted on 11 Dec 2012 by Neilson

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Ace Sandy LossesAce Ltd. and Montpelier Re Holdings Ltd. unveiled initial catastrophe loss estimates related to superstorm Sandy, with Ace lowering its 2012 operating earnings forecast as a result.

Ace estimated its fourth-quarter losses at $380 million related to the storm that hammered the Northeast in late October. The company now expects 2012 per-share operating income of $7.43 to $7.53, compared with its increased October projection for $7.73 to $8.03 before the storm hit. At the time, Ace had cited positive reserve development and lower- than-anticipated catastrophe losses.

Montpelier Re estimated its fourth-quarter pretax catastrophe losses at about $95 million, net of reinsurance recoveries and reinstatement premiums.

The insurance industry may pay out between $16 billion and $22 billion in claims from the storm, according to an estimate from AIR Worldwide late last month. The firm is one of three the insurance industry relies on for early insight into the potential costs of natural catastrophes.

Standard & Poor's Ratings Services on Monday said it only expects limited ratings impacts on insurers and reinsurers exposed to losses from Sandy, though the storm "could upend some previous beliefs regarding catastrophe losses"--namely assumptions about automobile-related losses and risk assumptions for nontraditional reinsurance products.

"We expect losses to reduce the (re)insurance industry's 2012 earnings, but not to impair industry capital," S&P analyst Jason Porter said.