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Insurer AIG predicts $3 billion in losses from catastrophes

Insurer AIG predicts $3 billion in losses from catastrophes”

Losses from Hurricane Maria and other recent natural disasters, including hurricanes Irma and Harvey, the Mexico City quake and other events, have led global insurers and reinsurers to issue profit warnings. (AIG) is expecting to suffer a loss in a range from $2.9 billion to $3.1 billion from third-quarter catastrophes, pre-tax but after taking into account its reinsurance arrangements.

Breaking down the expected losses, AIG said $1.1bn to $1.2bn in pre-tax losses would stem from Hurricane Harvey.

Despite the fact that AIG placed a $1.0bn back-up reinsurance cover around the time of Hurricane. The Mexico earthquakes were included in an additional $150 million in additional catastrophe losses it faced in the quarter.

Insurers and reinsurers are counting the costs of Harvey, which lashed Texas causing flooding that put it on the scale of Hurricane Sandy in 2012 and Irma, one of the most powerful Atlantic storms on record, which ravaged several islands in the northern Caribbean, before moving into Florida's Gulf Coast. It expects insured losses of about $520 million from Harvey and $640 million to $760 million from Irma after tax.

The companies cautioned that actual losses may vary materially from the preliminary estimates. "The loss estimate includes Lancashire's exposures through its Bermuda, UK and Lloyd's operations and in respect of the Company's participation within the Kinesis third party capital facility".

Morgan Stanley (NYSE: MS) analysts projected a net loss of $2.5 billion.

But AIG shares were plummeting already prior to the hurricanes.

Bermudian-based Validus Holdings estimates that its net losses in the third quarter due to the hurricanes and earthquakes, net of reinsurance and a number of other factors, will be $378.9 million.

Global insurer American International Group, Inc.

AIG has previously reported a net loss this significant previously.

SCOR French reinsurer Scor estimated a 430 million-euro ($506.45 million) impact from hurricanes Harvey, Irma and Maria and the Mexico natural disaster. AIG shares fell almost 12 percent from its third quarter earnings on August 2 and going into Hurricane Irma.

Lancashire's warning follows a host of similar announcements from insurers and reinsurers.

Insurers and reinsurers are counting the costs of the hurricanes that tore into parts of the USA, while ravaging several islands in the northern and eastern Caribbean.



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