Alberta Fires Worse for Canada Economy Than Katrina for U.S.by
Insured losses could reach C$9 billion, analysts say
Intact estimates losses between C$1 and C$1.20 per share
Intact Financial Corp. may post insured losses of as much as C$1.1 billion ($850 million) from the wildfires in Alberta, which could dent the Canadian economy harder than Hurricane Katrina hit the U.S.
Intact, Canada’s biggest property and casualty insurer, said the damage claims will lead to net losses of C$130 million to C$160 million, or as much as C$1.20 a share, according to a company statement Monday. Jaeme Gloyn, an analyst with National Bank of Canada Financial, estimated the C$1.1 billion figure based on the company’s per-share data. The Toronto-based insurer had net income of C$147 million in the first quarter.
“The devastation brought on by the wildfires is unprecedented,” Intact Chief Executive Officer Charles Brindamour said in the statement. “The scope of the damage and destruction that we have observed in recent days is a reminder of the important role we play in getting our customers back on track.”
The fires have covered 965 square miles and devastated the town of Fort McMurray, which was evacuated last week. It’s likely to be the costliest natural catastrophe in Canadian history, Fitch Ratings said Monday in a statement.
Industrywide insured losses could reach C$9 billion, according to reports from Bank of Montreal and others. With Canada’s 2016 gross domestic product estimated at $1.8 trillion, or about 10 percent of U.S. GDP, the disaster could be bigger on a relative basis than Katrina, based on an analysis by Imperial Capital. Katrina, the storm that hit New Orleans in 2005, cost $60.5 billion, according to data from Munich Reinsurance and the Insurance Information Institute.
The flames are scorching a region that’s home to oil and gas producers including Suncor Energy Inc. and Cnooc Ltd.’s Nexen. At least 1,600 homes and structures have been damaged. That’s more than triple the number from the Slave Lake Fire in Alberta in 2011, previously the country’s most costly fire and third-most expensive catastrophe, according to Aon Plc.
Alberta Premier Rachel Notley plans to tour the city Monday to assess the damage. Losses could be multiples higher than the Slave Lake fire, in part due to the greater average home price in Fort McMurray, Fitch said.
Intact’s damage estimates imply industry-insured losses of C$4 billion to C$7 billion, according to a report Monday from National Bank of Canada.
Intact rose 0.5 percent to C$87.92 at 3:04 p.m. in Toronto after falling four straight days last week, the longest streak since January, as the fires spread.
“Intact will easily earn their way through the impact of Fort McMurray wildfires,” Gloyn wrote in a report.
Intact said the assessment of insured damages, which was made using satellite imagery and exposure geocoding technology, is still early and assumes the wildfires won’t return to Fort McMurray. The company received about 19 percent of its premiums from Alberta as of last quarter. RSA Insurance Group Plc and Allianz SE’s Canadian unit are among other insurers that have been hurt by losses and claims from the fires, which forced the evacuation of more than 80,000 people.