Allied World reports $10.3 million in reinsurance catastrophe losses from Fort McMurray wildfire

Allied World Assurance Company Holdings AG reported Tuesday a 7.2-point improvement in its combined ratio, while the Fort McMurray, Alberta wildfires cost the carrier about $10.3 million and hail storms in Texas cost its reinsurance segment about $6 million and its primary insurance segment about $4.6 million.

All figures are in United States dollars.

Zug, Switzerland-based Allied World reported a combined ratio of 92.5% during the three months ending June 30, down 7.2 points from 99.2% during the same period in 2015.

Net losses and loss expenses were $365.4 million during the latest quarter, compared to $431.52 million during the second quarter of 2015.

Allied World “experienced $20.9 million, or 3.5 points, of catastrophe losses in the second quarter of 2016, compared to $25.0 million, or 3.9 points, in the second quarter of 2015,” the firm stated in a July 19 press release. “Within the Reinsurance segment, losses of $6.0 million arose from the April hailstorm in Texas and losses of $10.3 million arose from the Fort McMurray wildfires. Within the North American Insurance segment, losses of $4.6 million arose from the April hailstorm in Texas.”

The wildfire in Alberta, which started in early May, resulted in the evacuation of about 80,000.

As of July 6, Catastrophe Indices and Quantification Inc. (CatIQ) was estimating insured damage at $3.58 billion, of which 62% is personal property, about a third is commercial property and 5% is auto.

On April 12, a hailstorm touched down northwest of San Antonio, producing 4.5-inch hail, the Insurance Council of Texas reported earlier. San Antonio was hit by two more hail storms later in April. A hailstorm in the Dallas Fort Worth area March 16 caused about $600 million in damage, the Insurance Council of Texas reported earlier.

Allied World reported July 19 that its underwriting income increased nearly eight-fold, from $5.874 million in the second quarter of 2015 to $45.3 million in the latest quarter.

Allied World’s business segments are North American insurance, global markets insurance and reinsurance.

Its Q2 combined ratios were 92.3% in North American insurance, 115.7%  in global markets insurance and 80.6% in reinsurance.

Its North American insurance market includes Allied World Insurance Company, Allied World Assurance Company (U.S.) Inc., Allied World National Assurance Company, Allied World Specialty Insurance Company and Allied World Surplus Lines Insurance Company, the firm stated in an earlier filing with the U.S. Securities and Exchange Commission.

North American insurance includes specialty liability products, such as professional liability, environmental liability, product liability, healthcare liability and commercial general liability, among others. Target markets include retail, real estate, manufacturers, hotels and casinos, and municipalities.

Company wide, Allied World reported gross written premiums of $800.2 million in Q2 2016, down 4.2% from $835.9 million during the same quarter of 2015. Net premiums earned dropped 6.7%, from $646.4 million in Q2 2015 to $603 million in the most recent quarter.

Of Allied World’s net premiums written in Q2 2016, $329.6 million was from North American insurance, $179.1 million was from reinsurance and $94.156 million was from global markets insurance.

Net investment income was up 30%, from $42.8 million in Q2 2015 to $55.8 million in the latest quarter.

Allied World reported net realized investment gains of $74.5 million in Q2 2016, compared to net realized investment losses of $20.2 million in Q2 2015.

Total revenues were $738.48 million in the latest quarter, up from $669.9 million in Q2 2015.

Net income was $153.4 million in Q2 2016, up from $9.46 million in Q2 2015.

“The loss and loss expense ratio was 60.6% in the second quarter of 2016, compared to 66.8% in the prior year quarter,” Allied World said in a release. “During the second quarter of 2016, the company recorded net favorable reserve development on prior loss years of $37.8 million, a benefit of 6.3 percentage points to the loss and loss expense ratio, compared to $21.8 million a year ago, a benefit of 3.4 percentage points. All three segments benefited from net favorable reserve development this quarter.”

For the six months ending June 30, 2016, Allied World reported net income of $227.5 million on net premiums earned $1.183 billion, compared to net income of $133.8 million on net premiums earned of $1.215 billion during the same period of 2015.