Insurer Talanx AG’s $122 million loss from port explosions at Tianjin, one of China’s worst industrial disasters, takes the net hit incurred by insurers across Europe, the U.S., Bermuda and Asia to almost $2 billion, according to filings by 26 companies.
That’s at the lower end of an initial estimate by reinsurance broker Guy Carpenter of $1.6 billion to $3.3 billion after 173 people died following the Aug. 12 explosions. It’s the fourth most costly man-made disaster ever for the industry based on current estimates and adjusted for inflation, according to Swiss Re AG’s Economic Research and Consulting unit.
“Tianjin illustrates the challenges insurers and their clients face in managing risks in an era of rapid globalization,” said Charles Graham, an analyst at Bloomberg Intelligence in London. “This was first evident after the Thai floods in 2011. Business interruption is now one of the most difficult risks for insurers to assess.”
The highest costs from Tianjin were suffered by European firms, led by Zurich Insurance Group AG, whose $275 million loss was partly responsible for the Swiss firm abandoning its proposed takeover of Britain’s RSA Insurance Group Plc. China Reinsurance Group Corp. said its costs would not exceed $174 million, while Warren Buffett’s Berkshire Hathaway Inc. disclosed the highest loss from a U.S. insurer at $130 million.
The biggest man-made loss for insurers remains the Sept. 11, 2001 terrorist attacks in the U.S., which cost the industry $25.2 billion, the Swiss Re data shows. The second largest was the 1988 explosion on the Piper Alpha oil and gas platform off the U.K. which cost the industry almost $3 billion, when adjusted for inflation.
–With assistance from Sonali Basak.
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