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TransRe grows NWP by 19.9% in Q3 as underwriting loss rises to $232mn

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The underwriting loss at Alleghany grew to $200mn in the third quarter, up from $81mn last year, as $372mn in catastrophe losses at TransRe outweighed a $32mn overall underwriting gain in Alleghany’s insurance operations.

TransRe fell to a $232mn underwriting loss overall, with the $262mn underwriting loss its property division offsetting a $29mn gain in casualty and specialty. The loss at TransRe in the quarter grew from the $23mn loss it had a year ago.

In Alleghany’s insurance operations, RSUI generated a $32mn underwriting gain, a turnaround from last year, when it recorded a $55mn loss. CapSpecialty switched to a $1mn gain this past quarter, from a $3mn loss last year.

Companywide, Alleghany’s (re)insurance operations incurred $434mn in cat losses in the third quarter, resulting primarily from Hurricane Ida and European floods. In addition to TransRe’s $372mn current year cat losses – above the $84mn in cat claims it posted last year – cat losses cost RSUI and CapSpecialty $62mn and $1mn apiece. In 2020, the two companies recorded $135mn and $1mn in cat claims, respectively.

Alleghany’s adjusted diluted earnings per share nosedived by 139% in the quarter, to a loss of $1.26 per share. The overall combined ratio for its (re)insurance operations increased by six points to 110.8%, driven by the significant cat losses, resulting in a $14mn adjusted loss for the holding company in the quarter.

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Growth: Alleghany posted net premiums written of $1.98bn, 21.1% higher than the prior-year quarter, driven largely by improving market conditions. Rate-driven growth in professional lines and umbrella particularly contributed to a spike in premiums written, the company said.

TransRe’s net premiums written increased by 19.9% in the third quarter to $1.5bn, reflecting overall rate increases and growth in the US professional liability and agriculture lines of business.

RSUI’s net premiums written increased by 31.7% to $358mn in the third quarter, driven by improved market conditions, increases in business opportunities and higher rates.

CapSpecialty’s net premiums written climbed 8.3% YoY, showing growth in professional liability and other specialty casualty lines.

Underwriting:  The increase in TransRe’s combined ratio to 116.3% from 102% was driven by the surge in cat losses from Hurricane Ida and European floods, as well as losses related to Winter Storm Uri and other storms.

At the Alleghany-owned reinsurer, about $17mn in Covid-19-related reserve releases in the casualty and specialty segment mostly offset $15mn of additional Covid-19 loss in property.

RSUI’s combined ratio rose to 90.3% from 121.1% in last year’s comparable period, on the heels of lower catastrophe losses. CapSpecialty’s combined ratio fell to 99.0% from 103.2% last year, reflecting a lower expense ratio and reduced cat losses.

Investments: The carrier reported net investment income growth of 2.9% to $133mn.

Commentary: CEO Weston Hicks said: “Alleghany’s businesses produced very strong underlying operating performance but significant catastrophe losses, mostly at TransRe, resulted in an adjusted loss of $14mn in the quarter.

“We continue to believe that reinsurance catastrophe pricing needs to improve further to generate an appropriate rate of return on the capital required to support the business given a changing climate.”

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