Progressive records reinsurance recoverable in property business as May cat losses hit $722m

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Property and auto-focused insurance group, Progressive, has reported significant, net catastrophe losses of $722.1 million for the month of May, leading the firm to record a reinsurance recoverable of $95.1 million in its property segment under its per occurrence reinsurance arrangements.

progressive-logoThe more than $722 million of net catastrophe losses for the month translates to 12.3 loss ratio points, as losses and loss adjustment expenses for May approached $4.8 billion.

Three events, which primarily impacted Texas and the Midwest, drove nearly 60% of the catastrophe losses during May for Progressive, while other severe weather throughout the US during the month also had an impact.

Group-wide, the net catastrophe loss ratio, which represents cat losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned, was 12.3%, with a loss/LAE ratio of 81.7%, and an expense ratio of 18.7%, giving a company-wide combined ratio of 100.4% for May.

The insurer’s property segment assumed the majority of the catastrophe losses in the period, with a net cat loss ratio of a huge 173.4%. The property segment’s loss/LAE ratio hit 254.6% and the expense ratio hit 28.2%, resulting in a combined ratio of 282.8%.

As a result of the losses in its property business, Progressive recorded a reinsurance recoverable of $95.1 million, including losses and allocated loss adjustment expenses, under its per occurrence reinsurance contracts, which have a retention threshold of $200 million.

In 2023, no losses were ceded under the company’s occurrence XoL arrangement related to storms in the year, so it’s notable that Progressive has already made a reinsurance recoverable under these reinsurance arrangements.

The insurer has also revealed that on a year-to-date basis as of May 31st, 2024, it was actually close to reaching the annual retention thresholds under its 2024 catastrophe aggregate excess of loss reinsurance agreements. Once the retention thresholds are exceeded, Progressive has reinsurance coverage up to $85 million for non-named storm property catastrophe losses.

Progressive renewed its aggregate XoL reinsurance program for its property business at the January renewals with a lower retention for both layers.

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