Waves of severe thunderstorms in the U.S. during the first half of this year led to $34 billion US in insured losses, an unprecedented level of financial damage in such a short time, according to Swiss Re Group, as climate change contributes to the frequency and severity of violent meteorological events.
Damages from convective storms in the U.S., those that can come with hail, lightning, heavy rain and high winds, accounted for nearly 70 per cent of the $50 billion US in global catastrophic damages so far this year, the reinsurer said Wednesday. Those global figures include earthquakes in Turkey and Syria.
The storms in the U.S. were so severe, there were 10 that resulted in damages of $1 billion US or more, almost double the average recorded over the past decade, according to Swiss Re, and Texas was the state most severely effected.
“The effects of climate change can already be seen in certain perils like heatwaves, droughts, floods and extreme precipitation,” Swiss Re Group Chief Economist Jerome Jean Haegeli said in a prepared statement. “Besides the impact of climate change, land use planning in more exposed coastal and riverine areas, and urban sprawl into the wilderness, generate a hard-to-revert combination of high value exposure in higher-risk environments.”
There have been a multitude of high-profile meteorological events to start the second half of the year including heatwaves in the U.S., storms and floods across Canada, northwestern China and southern Europe, and wildfires on Greek islands, Italy and in Algeria.
Damages and insurance losses from those events are still being tallied, Swiss Re said.
The figures for the first half of the year are in line with a report last month from another reinsurer, Munich Re, which said the series of thunderstorms that raked Texas in June was the most expensive single event in the U.S. for the year so far. The overall loss from those storms alone is estimated at approximately $8.4 billion US.
“Devastating storms, which now seem to be the norm rather than the exception, are expected to continue to grow in intensity and severity,” wrote Marcus Winter, CEO, North America at Munich Reinsurance America.
Still cleaning up from Hurricane Fiona 8 months later
Evidence of Hurricane Fiona are everywhere in Glace Bay, N.S., nearly eight months after the storm hit. Many homes haven’t been repaired or rebuilt because disaster relief hasn’t arrived, or because there are no contractors available to do the work.
Winter said that it is “imperative” to act immediately in preparing communities for the “physical and financial risks of future climate-related weather events.”
Reinsurers are the insurance industry’s insurers, covering losses that could upend an individual company. Munich Re and Swiss Re have operations across the globe, including the U.S.
Kerry Symons is a businessman and the mayor of Perryton, a town of about 8,500 in the Texas Panhandle, one of the communities struck by a tornado in June. Three of his buildings were damaged and destroyed, including a furniture store. He also lost some vehicles.
Symons said he is like most residents in Perrytown in that he is still arguing with insurance companies. Some residents have sought his assistance as mayor.
“There’s not a whole lot we can do for them as a city,” he explained.
Perryton Mayor Kerry Symons, in red, clearing debris from a trailer park in Perrytown in Texas in June. The town was walloped by a massive storm that month, one of many to have been hit by an increasing volume of violent storms. (David Erickson/The Associated Press)
One lesson Symons has learned from the ordeal is the importance of an annual accounting for the cost of what is inside a building and what it would cost to rebuild. One of his buildings, a furniture store, was acquired recently so the valuation was easy. Another building that he has owned for 20 years has proved more difficult.
The increasing frequency of extreme weather has created disruptions within the insurance industry and some insurers have retreated from states that are getting hit hard, such as Florida and California.
The pullback by insurers is happening despite years of skyrocketing premiums for property owners in hard hit states.
State Farm and Allstate have pulled back from California’s home insurance market, saying that increasing wildfire risk and soaring construction costs mean they’ll no longer write new policies in the nation’s most populous state.
Last month Travelers said catastrophe losses doubled in its most recent quarter and the company, considered a bellwether for the insurance industry due to its size, said it lost money.
AAA has said that it will not renew “a very small percentage” of homeowners and auto insurance policies in hurricane-wracked Florida, joining other insurers in limiting their exposure in the Sunshine State despite efforts by lawmakers to calm the volatile insurance market.
AAA insists it’s not leaving Florida, but that last year’s devastating hurricane season had led to an unprecedented rise in reinsurance rates, making it more costly to operate there.
Florida has struggled to maintain stability in the state insurance market since 1992 when Hurricane Andrew flattened Homestead, wiped out some insurance carriers and left many remaining insurers anxious about writing or renewing policies in Florida. Risks for carriers have also been growing as climate change increases the strength of hurricanes and the intensity of rainstorms.
MONTREAL – National Bank of Canada reported a third-quarter profit of $1.03 billion, up from $830 million a year ago, helped by strength across its operations.
The Montreal-based bank said Wednesday its net income amounted to $2.89 per diluted share for the quarter ended July 31, up from $2.33 per diluted share a year earlier.
Revenue for the quarter totalled $3.00 billion, up from $2.49 billion in the same quarter last year.
The bank’s provision for credit losses, the amount it sets aside to cover bad loans, totalled $149 million for the quarter, up from $111 million a year earlier.
On an adjusted basis, National Bank says it earned $2.68 per diluted share in its most recent quarter, up from an adjusted profit of $2.18 in the same quarter last year.
The average analyst estimate had been for an adjusted profit of $2.49 per share, according to LSEG Data & Analytics.
“Our strong financial results for the third quarter reflect our diversified earnings mix and solid credit profile as well as disciplined execution across the Bank,” National Bank chief executive Laurent Ferreira said in a statement.
“With our prudent approach to capital, credit, and costs, we remain well-positioned in a complex macro environment and we look forward to the growth opportunities ahead.”
The bank said its personal and commercial operations earned $366 million in the third quarter, up from $319 million in the third quarter of last year, helped by growth in total revenue.
National Bank’s wealth management business earned $217 million in its latest quarter, up from $183 million in the same quarter last year.
The bank’s financial markets business earned $318 million in the quarter, up from $205 million a year earlier, while its U.S. specialty finance and international operations earned $158 million, up from $128 million.
National Bank’s “other” category reported a loss of $26 million in its latest quarter compared with a loss of $5 million in the same quarter in 2023.
This report by The Canadian Press was first published Aug. 28, 2024.
Toronto — Toronto-Dominion Bank (TD) has allocated a staggering US$3 billion to settle ongoing criminal and civil investigations in the United States over alleged shortcomings in its anti-money laundering (AML) controls. This move has intensified speculation around the future leadership of the bank, as current CEO Bharat Masrani’s succession plan gains urgency.
National Bank Financial analyst Gabriel Dechaine noted that the bank’s U.S. regulatory challenges have accelerated the need for a clear succession plan. “Succession questions have become even more intense because of the bank’s U.S. regulatory issues,” Dechaine commented, pointing out that under typical circumstances, Masrani’s replacement process would already be in progress. Masrani, who has led the bank for a decade, is 67 years old, making the timing of a transition a critical focus.
TD’s latest financial provision includes setting aside US$2.6 billion in anticipation of fines related to the AML probe, adding to the US$450 million reserved in April. This significant financial hit has raised concerns about the bank’s leadership stability, especially as several top executives, once considered potential successors to Masrani, have departed.
Among those who left are Michael Rhodes, former head of TD’s personal banking business, and Teri Currie, his predecessor, both of whom were seen as strong candidates for the CEO position. Other notable exits include Katy Boshart, now the CEO of Manulife Bank, and Tim Hockey, who left TD Ameritrade in early 2020.
Riaz Ahmed, currently CEO of TD Securities and head of wholesale banking, remains a potential internal candidate for the CEO role. However, at 61, some analysts consider him a less likely choice compared to younger executives like Leo Salom, who currently leads TD’s U.S. retail operations. Salom’s role is considered pivotal, making a leadership transition potentially disruptive to the stability of the U.S. division.
Dechaine suggested that while the regulatory fine provision might “clear the deck” for CEO succession, it also opens the door for the possibility of an external candidate taking the helm. Despite the uncertainty, there is some optimism that the global settlement of the AML issues could trigger a “relief rally” among investors, who have been waiting for a resolution to the investigations that have weighed on TD’s performance for over a year.
However, TD faces additional challenges. The bank’s recent decision to sell shares in Charles Schwab Corp. to strengthen its capital position will impact earnings and reduce TD’s ownership in Schwab. Moreover, Dechaine warned of potential non-financial penalties, including the possibility of an asset cap on TD’s U.S. operations. Such restrictions could limit the bank’s growth, leading to sub-par earnings compared to its peers and a potential decline in its valuation.
In response to the ongoing scrutiny, Masrani emphasized TD’s commitment to addressing the deficiencies in its U.S. AML program. “We recognize the seriousness of our U.S. AML program deficiencies and the work required to meet our obligations and responsibilities is of paramount importance to me, our senior leaders, and our boards,” he stated.
As TD navigates these turbulent waters, the focus on leadership succession will only intensify, with both internal and external candidates likely being considered for the top job. How TD manages this transition, alongside resolving its regulatory challenges, will be crucial in determining its future direction and stability.
OTTAWA, Aug 22 (Reuters) – Workers at Canadian National Railway (CNR.TO), opens new tab will begin returning to work on Friday, the Teamsters union said, hours after the Canadian government moved to end an unprecedented rail stoppage.
The union said the work stoppage at Canadian Pacific Kansas City (CP.TO), opens new tab would continue pending an order from the Canadian Industrial Relations Board (CIRB). The union and company officials are scheduled to meet with the board on Friday morning.
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Canada’s top two railroads, Canadian National Railway and Canadian Pacific Kansas City had locked out more than 9,000 unionized workers earlier on Thursday, triggering a simultaneous rail stoppage that business groups said could inflict hundreds of millions of dollars in economic damage.
The Canadian government on Thursday announced that it would ask the country’s industrial relations board to issue a back-to-work order that should come soon.
The CIRB, which is independent, will now consult the companies and unions before issuing an order.
CN had said it would end its lockout on Thursday at 6 p.m. ET (2200 GMT). CPKC said it was preparing to restart operations in Canada and further details on timing would be provided once it received the CIRB’s order.
“I assume that the trains will be running within days,” Labour Minister Steven MacKinnon told reporters.
As well as requesting a back-to-work order, MacKinnon asked the board to start a process of binding arbitration between the Teamsters union and the companies, and extend the terms of the current labor agreements until new agreements have been signed.
The sides blamed each other for the stoppage after multiple rounds of talks failed to yield a deal.
In a new statement during the early hours on Friday, the Teamsters union posted on X, opens new tab that it had taken down picket lines at CN.
