Monday 23 September 2019

Swiss Re estimates US hurricanes and Mexican earthquakes to cost industry $95bn

Companies are starting to assess the financial impact of recent natural disasters.

Hurricane Irma Dominica
Hurricane Irma Dominica

By Kalyeena Makortoff, Press Association City Reporter

Reinsurance giant Swiss Re has said the insurance market is set to lose a total of $95 billion (£72 billion) in the wake of three major US hurricanes and two devastating earthquakes in Mexico.

The firm estimates that its own operations will take a pre-tax hit of $3.6 billion (£2.7 billion), accounting for the combined effects of two Mexican earthquakes and damage caused by hurricanes Harvey, Irma and Maria.

Claims from the quakes alone are expected to total $175 million (£133 million).

But cross-industry losses far exceed those sums.

“Swiss Re estimates the total insured market losses of the industry caused by these events to be approximately USD 95 billion (£72 billion),” the reinsurer said.

London skyline

It warned that those estimates are subject to a “higher than usual” degree of uncertainty and may be adjusted as the claims assessment process continues.

Swiss Re’s chief financial officer, David Cole, assured investors that the company was well-positioned to deal with the losses.

“Swiss Re maintains a very strong capital position and high financial flexibility to support our clients’ needs, respond to market developments and execute on our capital management priorities,” he said.

The firm’s estimates are less than half of what Lloyd’s of London chief executive Inga Beale previously forecast, saying that the insurance market could take a near $200 billion (£152 billion) hit as a result of US hurricanes alone.

Lloyd’s has already begun paying “significant amounts” to those affected by Harvey and Irma, which have devastated parts of the US and Caribbean.

Insurer Hiscox, meanwhile, said it believes those two storms will cost the firm around $225 million (£170 million) in claims.

Swiss Re’s group chief executive, Christian Mumenthaler, said: “The most recent natural catastrophes have been extremely powerful and we extend our sympathies to all those affected by these events.”

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