Travelers Estimates $650 Million In Sandy Losses, After Tax, Reinsurance

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Hurricane Sandy is estimated to cost The Travelers Cos. $650 million after the company accounts for tax and reinsurance.

Reinsurance is insurance for insurers, covering insured costs if the dollar amount reaches a certain level.

 

Before tax and reinsurance, Travelers estimates losses of $1.1 billion. Travelers did not provide estimates by state.

The company said that due to the nature of the storm, the scope of it, the number of customers who had insured damage to car homes and businesses, and other factors, the actual losses may be different from the current estimate.

Estimates of overall losses to insurance companies and the economy in general have varied since the storm hit on Oct. 29. Most recently, Sandy is estimated to have caused a total of $16 billion to $22 billion in damage covered by insurance companies, according to a Nov. 26 estimate by AIR Worldwide, a catastrophe modeling company.

The Allstate Corp. said on Nov. 28 that it estimated catastrophe losses to be $1.08 billion, before tax and net of reinsurance. Allstate automobile claims accounted for 40 percent the total. Two-thirds of Allstate’s losses are in New York state and 20 percent are in New Jersey. The remaining 14 percent is in “other states,” the company said.

The Hartford Financial Services Group has not released estimated losses, other than to say they are “manageable.” The company must cover up to $350 million before reinsurance kicks in, and losses could amount to $350 million, The Hartford said. If the company has to pay more than $350 million in claims, 90 percent will be covered by reinsurers.

Liberty Mutual and Chubb Corp. have not released estimates of loss. Liberty Mutual is the top insurer of homes in Connecticut, based on premium revenue, followed by Travelers and Chubb. Travelers is the leading insurer of businesses in Connecticut, followed by Liberty Mutual and American International Group.

About Matthew Sturdevant

Full-time staff journalist at The Hartford Courant and magazine freelancer with a master's degree in writing from Dartmouth. My work has appeared in The Los Angeles Times, The Chicago Tribune, Taiwan News, The Baltimore Sun and many other news sources. My blog has been referenced by Politico.com, the Kaiser Family Foundation, the Georgetown Law Library and a number of organizations in healthcare and business. Sturdevant’s blog is "a well-written wealth of ideas," said The Donald W. Reynolds National Center for Business Journalism, (businessjournalism.org, May 18, 2011). I have experience writing for newspapers, magazines, Web sites and blogs as well as shooting and editing video. I made regular appearances on news-talk radio and on the NBC affiliate station in Corpus Christi, Texas. I made occasional appearances on the Fox affiliate in Connecticut promoting Hartford Courant articles.

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5 thoughts on “Travelers Estimates $650 Million In Sandy Losses, After Tax, Reinsurance

    1. ScoobyDoo

      They are claim losses for the insurance company who pools your premiums with the rest of their customers. For you as the policyholder they are (probably) covered losses. The idea is essentially everyone pays in a smaller piece to protect the few in the group with large losses — a risk pool. For example -one of us will have a car get damage for $1000. So 100 of us pay $10 into a pool so that when that one person has the loss they do not have to fully fund it out of pocket which in the case of a home would probably be impossible.

  1. portland

    Losses is an insurance term used to describe the amount of dollars that are paid for claims due to an accident or given event. It does not represent whether or not the company has made profits.

    Also, yes – premiums are paid for insurance that is used to pay for events like this. However, companies don’t price for an event like this each year. If they did, insurance costs would be much higher than they are. Instead, smaller amounts are added in to premiums each year and over time the insurance companies are able to pay claims from large events like this. So within a given year, if a major event doesnt occur, the insurance company may have a small profit while in a year when a large event such as Sandy occurs, a company may realize a loss.

  2. Chris DePino

    This completely explains why some carriers are having a very hard time in fairly paying insurance claims. What is not reported here is the hundreds of millions of fees they are reaping for administering the Federal Flood Program. Don’t feel too bad for any of them. The Federal Goverment is helping them out big time.

    1. ScoobyDoo

      When you say fees do you mean $$ that they turn around and use to pay their staff who investigate and price the losses as well as a fair return for the time and effort of these employees to pass along to the shareholders? Sounds like just about every business. Even the mutuals (policyholder owned) make a profit off their employees labor….and guess what, so do “non profits” a lot of the time.

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