Damage claim estimate doubledAssociated Press
Published September 13, 2005
GENEVA - Swiss Reinsurance Co., the world's second-largest reinsurance company, on Monday doubled to $40-billion its estimate of claims the global insurance industry will face from Hurricane Katrina - a figure that would make it the world's costliest hurricane.
Swiss Re, which previously agreed with the world's largest reinsurer, Munich Re, that the total losses would be $20-billion, said it increased loss estimates because the damage caused by the hurricane was greater than thought.
Swiss Re also more than doubled to $1.2-billion the estimate of the claims the company itself may face, which means it will fail to meet its earnings-per-share growth target of 10 percent this year. It previously had estimated its claims would be about $500-million.
Hannover Re AG, the world's third-largest reinsurer by gross premiums, noted that some estimates for Katrina's insurance losses go as high as $60-billion. It said that could mean it also might have to revise its net profit forecast below a previous estimate of at least $384-million.
Munich Re said it also will raise its estimates after it evaluates its exposure to the hurricane.
Risk Management Solutions Inc. of Newark, Calif., last week raised its forecast for the total insured loss caused by Katrina to $40-billion to $60-billion, up from its previous estimate of $20-billion to $35-billion. It now sees the total economic damage caused by the hurricane above $125-billion, up from its previous estimate of above $100-billion.
The revised estimates would make Katrina the most costly hurricane ever, ahead of Andrew in 1992, when claims reached $22-billion with figures adjusted to current dollar values, according to Swiss Re figures.
Swiss Re shares fell in early trading, but recovered and by late morning were up 0.6 percent at 82.90 Swiss francs ($66.70) on the Zurich exchange.
"Swiss Re's financial strength remains very strong and is expected to grow further in the second half of the year," the company said. It confirmed it plans to pay a dividend of 2.50 francs ($2.01) per share for 2005.
CEO John Coomber said the higher frequency of natural disasters would force up prices in upcoming renewals.
French reinsurer Scor SA, which has drastically cut back its U.S. business during restructuring over the past three years, said it is sticking to its original estimate that its exposure to losses from Katrina will be in a range between $31-million and $43.45-million.
The company said it was not liable for damages deemed to be caused by the hurricane but did cover businesses and infrastructure that may have been damaged by flooding.
Converium Holding AG, another reinsurer based in Zurich that has limited exposure in the United States, said its estimates for its own insured losses from Katrina remain unchanged at between $10-million and $20-million.