DisastersWorld's largest reinsurer posts lower losses than expected
The world’s largest reinsurer, Munich Re, posted smaller than expected losses for the first quarter of this fiscal year; the insurance giant warned investors for a “clearly negative” quarter as a result of insurance claims following the devastating earthquakes in Japan and New Zealand this year; but, its net losses were mitigated in large part by smaller tax bills as a result of the natural disasters; industry analysts expected the reinsurance giant to post a loss of roughly 1.6 billion Euros ($2.28 billion), however the firm defied expectations posting a net loss of 947 million Euros thanks to a favorable tax gain of 612 million Euros due to its quarterly losses
Munich Re's losses not at a level previously thought // Source: 2space.net
The world’s largest reinsurer, Munich Re, posted smaller than expected losses for the first quarter of this fiscal year.
Joerg Schneider, Munich Re’s chief financial officer, remains optimistic for the year.
“Despite these devastating natural catastrophes, we can still achieve a profit for the year as a whole,” Schneider said.
Following the earthquakes and wide-scale flooding and cyclones in Australia, Munich Re scrapped its earning target of €2.4 billion, or $3.4 billion, for the year and has not offered a new projection.
Schneider said, “It would be inappropriate to set a lower target.”
Reinsurance firms generally see their largest damage claims during the second half of the year, when the North Atlantic hurricane season hits its peak.
So far major storms have already hit states across the south and Midwest hard causing massive flooding and tornado damage.
These firms primarily function is to act as a financial backstop for major insurance companies when they face large claims.
Large insurance payouts following major natural disasters can sometimes help reinsurance companies and insurance firms’ bottom lines as it allows them to justify charging higher premiums.
Munich Re has already indicated that heavy damages this year has increased pressure on prices for natural catastrophe and industrial insurance and that reinsurance prices were likely to rise next year.
Torsten Jeworrek, the Munich Re board member in charge of the company’s reinsurance business, said, “Altogether, (price rises) will probably come out in the low single-digit percentage range.”
But Jeworrek was careful to note that this projection was purely speculative.
“I don’t have a crystal ball,” he said.
The world’s second largest reinsurance company, Swiss Re, reported a $665 million quarterly loss, while Hannover Re, the third largest firm, actually posted profits as a result of a tax rebate.
