Global reinsurers have, thus far, reported three of the five highest total catastrophe losses for the third quarter, according to an S&P Global Market Intelligence analysis, reinforcing analyst expectations that the sector will bear the brunt of losses for multibillion dollar events such as Hurricane Ida and summer European floods.

Swiss Re AG reported the second-highest total of $1.27 billion, consisting of $750 million from Ida and about $520 million from the floods, while RenaissanceRe Holdings Ltd. and Everest Re Group Ltd. were also in the top five with insured losses of $725 million and $635 million, respectively.

RenRe CEO Kevin O'Donnell said in the company's latest earnings call that reinsurers have absorbed a significant share of the volatility associated with elevated losses caused by climate change, social inflation and other loss drivers. The company needs to be paid "adequately" for the risk it assumes, and O'Donnell said the returns for shareholders over the recent five-year period were not sufficient for the capital they have deployed.

Jefferies analyst Philip Kett said in a report that he expects reinsurance deductibles will be exceeded in the third quarter, and with a higher proportion of net losses falling on reinsurers, these losses could drive further rate rises in property excess of loss contracts. The analyst noted that natural catastrophe losses year-to-date are running 103% higher than the long-term average and more than 90% higher than the 10-year average.

UBS analyst Will Hardcastle estimated the total losses for European reinsurers to be 2.5x that of the amount budgeted for the third quarter, leaving the companies having consumed 113% of the full-year budget already by quarter-end. Applying a normal fourth-quarter budget, European reinsurers will be 40% above budget on average by the end of the year, Hardcastle added.

Keefe Bruyette & Woods analyst Meyer Shields said reinsurers will likely "disproportionately bear" catastrophe losses from the third quarter, reflecting both actual losses and aggregate reinsurance protections, although core loss ratios should generally decline year over year.

The Allstate Corp. expects to record the largest total catastrophe loss for the latest quarter at $1.30 billion, while The Progressive Corp. rounded out the top five with losses of $510 million.

The Travelers Cos. Inc. logged third-quarter pretax catastrophe losses of $501 million. CFO Dan Frey said the insurer recognized a partial recovery of $95 million from its property aggregate catastrophe excess-of-loss treaty, "$83 million benefiting the cat line with $43 million in business insurance and $39 million in personal insurance and $12 million benefiting our underlying results with $3 million in business insurance and $9 million in personal insurance."

Travelers has about $255 million of potential recovery in the fourth quarter, depending on the level of qualifying losses, Frey said.