Munich Re, the world’s largest reinsurer, issued a statement estimating that its losses from “an unusually close succession of windstorms in the Atlantic and Pacific” would be around 500 million euros ($616 million).
The company indicated that the loss estimates include claims from Hurricane Jeanne, and that overall it will make the reinsurer’s earnings target for the year “much more difficult to achieve.”
Munich Re said the Group “is less strongly impacted by the cyclones in the Atlantic and in the Pacific than first supposed.” The loss estimates concern only the Group’s reinsurance units. Its primary insurance operations were not affected.
Giving further details Munich Re said it could reduce its estimate for Charley to 75 million euros ($92.4 million). It also anticipates a loss of 65 million euros ($80 million) for Frances and 215 million euros ($265 million) for Ivan. Jeanne, which was still active when the bulletin was released, will probably generate losses ranging between 80 and 100 million euros ($98 to $123 million). The burden for the Group from the Pacific typhoons Songda and Chaba amounts to 40 million euros ($49 million).
Stefan Heyd, the Board member whose responsibilities include corporate underwriting, commented: “In spite of the loss picture being more favorable now, the overall burden including the losses from Hurricane Jeanne will make it much more difficult to achieve our 2004 target (Euro 2 billion [$2.46 billion] after taxes).”
Munich Re also noted that “economic losses from this year’s windstorm season in the Atlantic and the Pacific so far are considerable, as are insured losses.” It estimates overall economic losses so far at around $50 billion and total insured losses at approximately $20 to $35 billion.
“The reduced burden on Munich Re compared with similar natural hazard events of the past is due to our business policy with regard to deductibles and limits of liability in recent years,” Heyd observed. “We continue to attach great importance to risks being transparent, meaning that we have been and still are able to be much more selective in our approach.”
Heyd also pointed out that the Florida Hurricane Catastrophe Fund is participating to a substantial degree in the compensation in the personal lines property insurance sector.
“From the upcoming treaty renewals in reinsurance business, Munich Re expects the current level of risk-adequate prices and conditions to remain stable on the whole,” the announcement concluded.
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