RenaissanceRe today announced it estimates that losses from weather-related catastrophe events and certain losses related to the COVID-19 pandemic will have a net negative impact on the Company’s fourth quarter 2020 results of operations. For the fourth quarter of 2020, the Company expects to report net income available to common shareholders; however, it expects to report an operating loss attributable to common shareholders.
The Company currently estimates that losses from weather-related catastrophe events which occurred in both the third and fourth quarters of 2020 will have an estimated net negative impact of approximately $170 million on its fourth quarter 2020 results of operations. This net negative impact estimate includes Hurricanes Delta, Zeta and Eta, as well as aggregate losses associated with these and other events, and changes in estimated losses from third quarter 2020 weather-related catastrophe events.
In addition, the Company currently estimates that losses related to the COVID-19 pandemic will have an estimated net negative impact of approximately $175 million on its fourth quarter 2020 results of operations. This estimated net negative impact is primarily driven by approximately $165 million of losses in the Property segment, principally representing the cost of claims incurred but not yet reported, with respect to exposures such as business interruption coverage, and with the balance pertaining to the Casualty and Specialty segment.
Kevin J. O’Donnell, President and Chief Executive Officer of RenaissanceRe, commented: “In the fourth quarter, people and communities around the world were negatively impacted by persistent weather-related catastrophe activity as well as the ongoing consequences of the COVID-19 pandemic. We extend our sympathies to all those affected by these tragedies. Consistent with our long-term track record, our strong capitalization enabled us to meet the quarter’s challenges while continuing to build trusted long-term partnerships.”
Net Negative Impact
Net negative impact includes the sum of estimates of net claims and claim expenses incurred, earned reinstatement premiums assumed and ceded, lost profit commissions and redeemable noncontrolling interest. The Company’s estimates of net negative impact are based on a review of its potential exposures, preliminary discussions with certain counterparties and actuarial modeling techniques. The Company’s actual net negative impact, both individually and in the aggregate, may vary from these estimates, perhaps materially. Changes in these estimates will be recorded in the period in which they occur.
Meaningful uncertainty regarding the estimates and the nature and extent of the losses from catastrophe events remains, driven by the magnitude and recent nature of each event, the geographic areas impacted by the events, relatively limited claims data received to date, the contingent nature of business interruption and other exposures, potential uncertainties relating to reinsurance recoveries and other factors inherent in loss estimation, among other things.
The Company continues to evaluate industry trends and its own potential exposure associated with the ongoing COVID-19 pandemic, and expects historically significant industry losses to emerge over time as the full impact of the pandemic and its effects on the global economy are realized. Among other things, the Company continues to actively monitor information received from or reported by clients, brokers, industry actuaries, regulators, courts, and others, and to assess that information in the context of its own portfolio. The Company’s loss estimates represent its best estimate of incurred losses based on currently available information, and actual losses may vary materially from these estimates.