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Allied World Estimates Sandy Loss
XL AXS AWH
Allied World Assurance Company Holdings, AG ( AWH - Snapshot Report) expects to incur $165 million from catastrophe loss, pre-tax and net of reinsurance recoverables, and reinstatement premiums in the fourth quarter of 2012. The loss stemmed from Superstorm Sandy, which occurred in late October.
Majority of the loss (approximately 58%) will be borne by the Insurance segment, while the remaining will be borne by the Reinsurance segment. Within the Insurance segment, U.S. Insurance will incur $21 million in net loss, while International will bear $74 million in net loss. Together, these will take the total loss incurred by the Insurance segment to $95 million.
The company posted strong results in each of the three quarters in 2012, due to the absence of any major catastrophes. However, the final quarter might show a different picture due to the impact of Hurricane Sandy. Loss modeling companies project the amount to be approximately $25 billion.
The Zacks Consensus Estimate for the fourth quarter is 14 cents, representing a year-over-year decline of 94%. The company outpaced the Zacks Consensus Estimate for the last three quarter with an average earnings surprise of approximately 77%. Further, we believe that the solid performance in the each of the three reported quarters will more than offset the headwinds in the fourth quarter, thereby aiding the company post better numbers. The Zacks Consensus Estimate for 2012 is currently pegged at $7.25, representing a year-over-year improvement of nearly 57%.
Among the other property & casualty insurers, Montpelier Re Holdings Ltd. expects pre-tax net loss of approximately $95 million from Sandy in the fourth quarter, while ACE Limited expects loss to be approximately $380 million after tax. XL Group plc’s ( XL - Analyst Report) loss is estimated at nearly $350 million, while Axis Capital Holdings Limited’s ( AXS - Analyst Report) pre-tax loss is estimated at $300 million
Allied World currently carries a Zacks #3 Rank, translating into a short term Hold rating.