With Hurricane Losses Insurers Downgrade Anticipated Profit Goals
Allstate expects insurance losses of about $593 million for August mainly due to Hurricane Harvey, which left a path of destruction along the Gulf Coast.
The initial accounting follows warnings from other insurers that are tallying the damages from a hurricane season that is nowhere near being over.
“The key thing is that we’re in the peak of an extremely active hurricane season,” said Dr. Gerry Bell, lead seasonal hurricane forecaster at the National Oceanic and Atmospheric Administration.
Allstate’s August losses, which likely have not been fully accounted for, are more than three times the $181 million recorded in July.
Harvey made landfall in Texas on August 25. More than half the losses from that storm are related to vehicle damage.
Allstate, based just outside of Chicago, says that because of widespread damage and the inability of people to get to their homes or cars, its estimated losses may grow. As of late September, Allstate had not yet released its estimates for Hurricane Irma, which made landfall in Florida on September 8.
German reinsurer Munich Re was the first to warn that it may not meet previous financial goals following the one-two punch of Harvey and Irma.
Others have issued more pessimistic outlooks. Travelers Companies Inc. suspended its stock buyback plan to raise cash. German reinsurer Hanover Re, like Munich Re, said it could miss profit targets.
The Insurance Council of Texas, the nation’s largest state insurance trade association, estimates overall insured losses from Harvey at nearly $19 billion.
That amount includes an estimate from the Federal Emergency Management Agency in which Harvey’s flooding will result in $11 billion in payments to homeowners with flood insurance. Those flood losses would be the second highest on record, trailing only Hurricane Katrina’s $16 billion.
Harvey flooded a vast area stretching from Houston to the Louisiana border. The storm caused 70-plus deaths and damaged or destroyed more than 250,000 homes and hundreds of thousands of automobiles.
Two weeks later, Irma carved a path of destruction through the Caribbean and then enveloped Florida.
CoreLogic, a property data company, expects damage to commercial and residential property from Irma to range from $42.5 billion to $65 billion. That estimate includes insured and uninsured losses.
Following Irma, Hurricane Maria slammed into Puerto Rico as the third-strongest recorded storm to make landfall in the U.S., the entire island was without power and besieged by landslides and floods.
In an updated forecast, NOAA said there could be up to 19 named storms and as many as nine hurricanes in the North Atlantic Ocean, Caribbean Sea and Gulf of Mexico this year. Half of those hurricanes could be major, according to NOAA.
So far there have been 13 named storms, with four major hurricanes.
The hurricane season runs through November.