Insurin’ it
McDonald’s pumps $5m into Dublin-based insurance arm
THE European office of McDonald’s has stuffed $5m (€4.3m) into a Dublin-based firm owned by the fast-food group in order to boost its solvency cover.
The cash infusion comes after the Ireland-based insurance arm, Golden Arches Insurance, saw its level of claims – net of reinsurance – soar to $48.4m (€42m) in 2017 from $24m a year earlier as it grappled with the aftermath of hurricanes that battered the Caribbean that year.
In September 2017, hurricanes Maria and Irma carved paths through the region, devastating islands and resulting in dozens of fatalities.
Hurricane Maria hit Puerto Rico particularly hard, with a US government report last month estimating that the storm would cost the territory to the tune of $43bn (€37.2bn). The report said the economic impact of the hurricane would continue to be felt for an “undetermined amount of time”.
US President Donald Trump was highly criticised for his response to the hurricane aftermath and has also questioned data regarding the number of people killed by the storm.
Accounts for the Dublin-based McDonald’s unit that insures the chain’s restaurants and is managed under contract by Aon Insurance Managers, lay bare the huge financial cost of the storms to the group in 2017.
“The company’s performance during the year was significantly impacted by catastrophe losses resulting from hurricanes which occurred in the Caribbean,” they note.
The firm racked up a pretax loss of $16.9m (€14.6m) in 2017, compared to a pre-tax profit of $9.2m (€8m) in 2016.
At the end of 2017, it also had a $17.3m (€15m) provision made for outstanding insurance claims, compared to $1.4m that was outstanding at the end of 2016.
The company wrote gross premiums of $44.7m in 2017, compared to $40.5m in 2016. Of the 2017 premiums, $39m were related to risks in Europe, including $9.4m for third party liability and $29.6m for fire and other risks to property. The remaining premiums, the accounts note, were spread across risks in regions including Asia, Oceania and the United States.
The accounts also show that Golden Arches Insurance had about $66.5m (€57.7m) on deposit with credit institutions at the end of 2017.
That included $33.2m with Barclays, $28.1m with BNP Paribas, and $5.1m with Bank of Ireland.
Golden Arches Insurance said in its last set of filed accounts that it expected to return to profitability last year, “assuming that significant catastrophe losses do not arise”.
Last year brought another destructive season of hurricane activity. Hurricane Florence caused major flooding in parts of North and South Carolina. Hurricane Michael was one of the strongest storms ever recorded in the US to make landfall.