Allied World expects $40 million in crop and catastrophe losses from U.S. drought in Q3

Switzerland-based Allied World Assurance Company expects about $40 million of crop reinsurance related losses and expenses in the third quarter of this year from severe drought conditions in the Midwestern United States.

That is in addition to anticipated crop losses and expenses prior to the drought, the company said in a statement.

Allied also expects to record between $5 million and $10 million is losses and loss expenses in Q3 from August’s Hurricane Isaac on the U.S. Gulf Coast, it said.

The company has said it made these pre-tax net estimates based on preliminary information from clients and brokers, a review of in-force policies, a review of reinsurance agreements and from crop and catastrophe modelling.

Actual losses may vary from the current estimates because of the preliminary nature of some data and potential inaccuracies or inadequacies, a company statement noted. “In addition, ultimate losses on our crop reinsurance book can be materially impacted by finalized yield tallies and commodity price levels,” it said.