Insurance catastrophe losses and pricing: Rates fell, warnings held
Insurers described falling catastrophe renewal rates, market-driven premium reductions and persistent risks from severe weather and higher replacement costs.
Property insurer Rli Corp (RLI) reported first-quarter renewal rate declines of 19% for hurricane coverage and 16% for earthquake coverage. The company said market capacity remained “plentiful” and described a shift in its Property business mix from catastrophe to non-catastrophe premium. Those disclosures put specific pricing declines behind its description of a continued competitive environment.
Rli Corp and reinsurer SiriusPoint Ltd (SPNT) each described reductions in catastrophe-related business. Rli Corp said its Property segment premium fell 9% as its business mix shifted. SiriusPoint said Property Cat Re premiums fell 31% because of market conditions; its explanation of the overall quarterly premium decline also cited reinstatement premiums included in the prior-year period.
Lower catastrophe losses accompanied better underwriting ratios at SiriusPoint and property insurer Renaissancere Holdings Ltd (RNR). SiriusPoint said its first-quarter loss ratio improved 15.5 percentage points, attributing the improvement to lower catastrophe losses against a comparison period affected by California wildfires. Renaissancere reported a Property segment combined ratio of 34.1%, compared with 148.7% a year earlier, and also attributed its result to lower catastrophe losses.
The recurring weather-risk language remained unchanged at property and casualty insurer Universal Insurance Holdings, Inc. (UVE) and insurance group Donegal Group Inc (DGICA). Universal continued to warn in April and July that catastrophe exposure can cause significant losses and period-to-period variation in financial results. Donegal retained its warnings about catastrophic weather, changing climate conditions and its ability to “charge adequate premium rates.” Its loss-cost warning also continued to name escalating property repair costs, including costs due to tariffs.
Florida-focused property and casualty insurer American Integrity Insurance Group, Inc. (AII) gave reserve uncertainty a concrete historical basis: the company said actual claims “have exceeded” reserves established for claims and may do so again. It also said substantially all its business is in Florida, making its financial results dependent on the state's regulatory, legal, economic and weather conditions. Its climate warning remained conditional: changing conditions may increase catastrophe frequency and severity.
Insurance software company Guidewire Software, Inc. (GWRE) used more definite language about climate effects in both June and September, saying climate change and other environmental factors “are contributing” to erratic weather patterns and intensifying certain catastrophes. Guidewire also said its insurer customers have experienced catastrophe losses and are likely to experience further losses that may adversely affect their businesses. The repeated wording supported continuity across those disclosures.
Insurer Palomar Holdings, Inc. (PLMR) likewise retained its catastrophe warning between May and August, including the risk that more frequent or severe weather could impair its ability to predict, quantify, reinsure and manage catastrophe exposure. Its forward-looking claims warning extended to rebuilding costs: higher material and labor costs, greater concentrations of insured property and changing cyclical weather patterns may increase the severity of future catastrophe claims.