Swiss Re sees $300 million hit from Europe floods

ZURICH Mon Jul 8, 2013 9:35am BST

A logo is pictured in front of the headquarters of Swiss reinsurer Swiss Re in Zurich February 5, 2009. REUTERS/Christian Hartmann

A logo is pictured in front of the headquarters of Swiss reinsurer Swiss Re in Zurich February 5, 2009.

Credit: Reuters/Christian Hartmann

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ZURICH (Reuters) - Reinsurance specialist Swiss Re (SRENH.VX) expects sector-wide losses from widespread flooding in central and eastern Europe to total $3.5-4.5 billion and puts its own hit at a fraction of that at $300 million euros.

The Zurich-based reinsurer's forecast for the floods that swept Germany, the Czech Republic, Austria, Hungary and Slovakia in June contrasts with an estimate from catastrophe modelling firm AIR Worldwide which said insurance claims for flood damage in Germany alone may be as much as $8 billion.

Swiss Re said prevention measures such as mobile flood barriers used in Prague helped spare many regions from large losses.

"Thanks to timely prevention measures, large areas have been saved from flooding," said Swiss Re's Group Chief Underwriting Officer Matthias Weber.

Credit rating agency Fitch has said losses from the worst flooding in a decade could be up to 3 billion euros ($3.85 billion) in Germany, while Insurance broker Willis (WSH.N) estimated claims of 4 billion euros ($5.13 billion) in Europe.

Europe's biggest insurer, Allianz (ALVG.DE), has pencilled in claims of 500 million euros from the floods across Europe, before passing on some costs to reinsurers

Reinsurers like Hannover (HNRGn.DE), Munich Re (MUVGn.DE) and Swiss Re help insurance company customers cover the cost of major damage claims like hurricanes or earthquakes in exchange for part of the premium.

Vontobel analyst Stefan Schuermann said the claims burden would pose little threat to the reinsurer's earnings and ability to pay a high dividend.

"This first major natural catastrophe loss event will impact second quarter results but year-to-date natural catastrophe claims remain well below budget having experienced virtually nothing in the first quarter," Schuermann said.

Shares in Swiss Re were trading up 1.5 percent at 71.30 Swiss francs by 0754 GMT, more or less in line with the European insurance sector .SXIP

Swiss Re reported a 21 percent rise in profit in the first quarter, driven by a rise in premium and fee income, low catastrophe losses and the expiry of a quota share agreement with Warren Buffett's Berkshire Hathaway (BRKa.N).

(Reporting by Caroline Copley; Editing by Edwina Gibbs and Patrick Graham)

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