Generali’s catastrophe losses exceeded budget by end of Q3

In a further sign of frequency hitting insurers at a time when they are generally retaining more risk, Italian insurance giant Generali has already exceeded its 2023 annual budget for catastrophe losses by the end of the third-quarter.

Generali’s Group Chief Financial Officer, Cristiano Borean was speaking at an event in Munich, Germany yesterday and according to Reuters the CFO revealed that Generali anticipates around US $888 million (EUR 840m) of natural catastrophe losses for the first nine months of the year.

Borean said that this amount exceeded the full-year catastrophe and weather loss budget that had been set, although he did not say by how much.

Citing frequency and loss events becoming increasingly impactful, Borean is echoing many other major insurers this year, both in Europe and globally.

A year ago, Generali put its 2022 nat cat ratio at 2.6% for the full-year, but Borean cited a prior year figure of EUR 673 million.

In 2023, it seems the third-quarter has driven a significant weather and catastrophe loss burden for Generali, as after the first-half of the year the insurer reported its nat cat loss ratio at 1.2%, down on H1 2022’s 1.9%, which was estimated to have been EUR 179 million of losses.

So, for nat cat losses to have jumped to EUR 840 million after the nine months, suggests a heavy toll of as much as EUR 661 million just for Q3.

Which suggests there could also have been some significant loss creep related to the severe flooding in Italy from May this year, which may have been a large event for Generali.

It’s important to note, it’s not certain whether Borean might have been including man-made catastrophe losses int he figure he cited at yesterday’s event.

Secondary peril events, from severe weather, convective storms, hail, rainfall and flooding have driven significant losses all around the world in 2023, including across Europe.

At the same time, with aggregate reinsurance much less available and attachment points higher for occurrence reinsurance layers, insurers are generally retaining much more of the frequency losses they suffer from weather and catastrophe events.

Which will likely be the case for Generali as well, further highlighting the reinsurance gaps that now exist, where in the past if an insurer went over its catastrophe budget, reinsurance recoveries were almost inevitable. Today, it is harder to say if reinsurance has responded, or not.