PHILIPSBURG–NAGICO Insurances has more than enough reinsurance in place to cover its claims from Hurricanes Irma and Maria, its Chairman Imran McSood Amjad was quoted as telling an industry website.
NAGICO has notified its excess-of-loss reinsurers of an expected loss of US $325 million to $400 million from Irma and is expecting a gross loss of around $100 million from Maria.
McSood told The Insurance Insider, a website that covers the global insurance industry, that concern in some quarters that it could go through the top of its reinsurance on Irma was misplaced.
“We are confident, as are the regulators, that the impact on NAGICO’s financials will not be as massive as people might expect and that our reinsurance coverage is sufficient. We will be able to look after all our clients with room to spare,” he was quoted as saying.
“NAGICO has placed reinsurance based on RMS modelling and we are 200 per cent confident that we are well covered.”
Irma ripped through the Caribbean, making landfall in Barbuda with winds of more than 150mph. It passed over St. Maarten/St. Martin and caused massive devastation before it struck the [British] Virgin Islands.
RMS has estimated losses in the Caribbean from the event at $10 billion to $20 billion, while AIR Worldwide has pegged the losses at $7 billion to $15 billion.
McSood said he believed the industry losses were not as high as some feared and that damage factors of 50 per cent for Dutch St Maarten, where the insurer is headquartered, were overstated.
“I have been personally to visit with our CEO virtually every major insured on the island,” he said. “We have been there and we’ve seen the damage.”
The Insurance Insider reported that fears had been mounting in the sector that the insurer, which has a dominant market share in the Dutch Caribbean, would exhaust its reinsurance, which was believed to include an excess-of-loss tower as well as a 50 per cent quota share.
McSood confirmed that there was a 50 per cent quota share in place with 50 per cent owner Peak Re that had a low cap for catastrophes, which meant that the Hong Kong reinsurer’s direct exposure to the losses would be “minimal.”
The net account is protected by an excess-of-loss tower led by Swiss Re, which McSood said is “substantially” more than the $400 million reported.
In addition to this heavily impacted cover, he said NAGICO purchases facultative reinsurance.
“It is not on everything, but we buy it on quite a few [accounts – Ed.],” he said.
He said NAGICO also had an unlimited quota share for all of its cat exposure in French St Martin and noted that the carrier had put windstorm caps on some of its policies.
“We have one risk, for example, where the sum insured is over $200 million, but the [windstorm – Ed.] cap is $10 million,” he told the publication.
McSood explained that the firm had a net retention of $2.5 million for Irma and $2.5 million for Maria, against a capital base of around $100 million.
NAGICO, which has a B++ financial strength rating from AM Best, wrote $146 million of business across two entities in 2016, according to credit reports from the ratings agency.
AM Best said St. Maarten/Curacao/Bonaire accounted for 27 per cent of gross written premium across the group, which is equivalent to $39 million. It added that 14 per cent of premiums were sourced from the British Virgin Islands, representing $20 million
A range of Caribbean insurers have bought third- and fourth-event protections from reinsurers following Irma and Maria.
McSood said NAGICO was talking to its brokers about buying additional cover, but already had reinsurance in place to cover a third event