Zurich Financial Services Group (Zurich) announced that it expects aggregate claims payments related to Hurricane Katrina of approximately $600 million after tax. This figure is net of reinsurance recoverables. It includes reinsurance restatement premiums and is based on an estimated loss after reinsurance and before tax of $725 million. The corresponding charges for Katrina will be recorded in the third quarter.
The task of estimating Katrina claims payments at this stage involves
considerable judgment calls, Zurich said in a statement. The many reasons include the sheer scale of destruction in Alabama, Louisiana and Mississippi, complex loss adjustment issues, the enormous cleanup and restoration efforts, as well as wide-spread and potentially long-lasting business income loss. Since claims adjusters were able only recently to access the areas affected by Katrina, the current estimate is based on a combination of analytical approaches as well as calculations including exposure models and actual loss appraisals.
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