David Flandro, Senior Vice President
As expected, the trend of upward loss estimate revisions related to Hurricane Ike continues. Validus Holdings Ltd. is the latest to announce a change, raising its estimate of Hurricane Ike-related losses to USD235.1 million. This represents an increase of USD70.1 million. The reinsurer’s estimate for Hurricane Gustav remains unchanged at USD20.8 million. Validus Chairman and CEO Ed Noonan says that a disproportionate percentage of increases has been borne by reinsurers, as ceding companies increasingly attach excess reinsurance layers, which trigger reinsurance recoveries.
Marine losses, including off-shore energy installations, led to significant increases in loss estimates and reflect the complexity and difficulty of modeling exposure, as well as the subsequent investigation and assessment of claims. Guy Carpenter expects that other companies may report increased loss estimates for Hurricane Ike - whether in preemptive statements or in fourth quarter and full-year 2008 results.