Liberty Mutual estimates up to $900m of hurricane losses from Helene and Milton

Liberty Mutual, the insurance and reinsurance group, has pre-announced estimated losses of up to $900 million from hurricanes Helene and Milton, but still anticipates delivering an underwriting profit for the next reported period, with its combined ratio forecast to come in around 97% for the third-quarter and first nine months of 2024.

For hurricane Helene, Liberty Mutual has estimated pre-tax losses of approximately $550 million, which will be included in its next set of results for Q3.

For hurricane Milton, the re/insurer explains that this event is still developing and will be reflected in the fourth quarter, but Liberty Mutual’s current estimate for the storm is for pre-tax losses of between $250 million and $350 million.

Liberty Mutual has based these figures on actual claims reported as well as modeled results based on total industry estimates, but notes with development ongoing these could be subject to change. The company has not disclosed its gross losses, although at these quantum it is entirely possible some reinsurance recoveries will be made, at the least through quota share arrangements.

The company has pre-announced these financial figures today “a potential capital markets transaction,” it explained.

Despite the meaningful catastrophe losses from these hurricanes, Liberty Mutual is still forecasting an underwriting profit for the third-quarter of 2024 and first nine months, forecasting a combined ratio of 97% for both periods.

The company also forecasts net income for the three and nine months ended September 30th 2024 of approximately $900 million and $3 billion, respectively.

In addition, net written premiums are expected to be reported as roughly $12 billion for Q3 and $34 billion for the first-nine months.

It’s not clear what the capital market transaction is that Liberty Mutual has referred to in its announcement today.

In 2020, 2022 and 2023 Liberty Mutual has sponsored a new Mystic Re catastrophe bond in the final quarter of the year, with each settling in December.

While we have no information to suggest another cat bond is planned, this kind of transparency and reporting on loss impacts is typically welcomed by investors that might support any type of capital markets transaction that Liberty Mutual might bring.