Insurers Say Katrina Losses Worse than Expected
Posted on: Monday, 12 September 2005, 09:55 CDT
NEW YORK -- Insurers assessing their losses from Hurricane Katrina are now saying damages will be worse than previously expected as Standard & Poor's threatened to downgrade 10 large insurance groups.
Swiss Re on Monday doubled its expected bill from the disaster to $1.2 billion, while rival reinsurer Munich Re said on Sunday its claims bill would rise above initial estimates.
Montpelier Re Holdings estimated on Monday the preliminary impact of hurricane losses will be in the range of $450 million to $675 million, pushing its shares down more than 14 percent in U.S. trading.
"This is a significant net loss for us," said Anthony Taylor, Chairman, President and Chief Executive of Montpelier.
Also on Monday, mortgage lender Countrywide Financial Corp. said Katrina losses related to its insurance operations and some of its loans will be significant and likely exceed the $70 million loss from hurricanes in 2004.
The warnings follow a statement from Standard & Poor's Ratings Service late on Friday saying it may cut the ratings of 10 insurance and reinsurance companies, including Allstate Corp., Montpelier, Allmerica Financial Corp. and Swiss Re.
The credit rating warnings came on the same day Risk Management Services, a Newark, California-based disaster modeling firm, raised its estimate of insured losses to as high as $60 billion from a maximum of $35 billion.
In Europe on Sunday, Munich Re, the world's number one reinsurer, said its estimate of Katrina claims, currently about 400 million euros is probably too low.
Hannover Re said it may have to lower its earnings forecast further if its share of claims from Katrina, which it currently estimates at 250 million euros before tax, increases, though it said it saw no need to do so now.
It may take a long time to put a price on the final cost of the clean-up, reinsurers warned. But the reverberations from Katrina are already being felt throughout that market.
"(Katrina) will be a loss of an enormity that will change the basis on which we do business in the industry," deputy chairman Charles Cantlay of reinsurance broker Aon Re UK, part of Aon Corp., told reporters at an industry conference in Monte Carlo.
Source: REUTERS
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