Windstorm Mike-Niklas insured loss estimated at €853m: PERILS

The initial estimate for insurance industry losses from European windstorms Mike & Niklas has been put at €853m by PERILS AG. The storms caused significant damage across Europe, with the majority of the impact being felt in Germany.

European windstorm Mike – Niklas, known as Lentestorm in the Netherlands, struck Europe at the end of March, impacting much of Western and Central Europe.

The two storms occurred close together and affected the area within a 36 hour period, making it difficult to allocate losses to the individual storms. As a result PERILS provides the loss estimate on a combined basis, although Niklas was by far the stronger storm and likely responsible for the bulk of the losses.

PERILS’ has released this morning its initial estimate of the insured property market loss for Mike-Niklas, which it estimates to be €853m (approx $952m or £618m). The majority of the losses are seen to emanate from Germany, where the impact of the storms was greatest, but losses also occurred in Austria, Belgium, the Netherlands, Switzerland and the United Kingdom.

The market loss estimate from PERILS is based on ultimate gross loss data, as reported by primary insurance companies, and excludes losses indemnified by government insurance schemes.

In line with PERILS typical reporting schedule, it will provide an update of the estimate of the Mike-Niklas market insured loss on the 29th June 2015, three months after the event start date.

Edi Held, Head of Product at PERILS, commented; “There are two factors which distinguish Mike-Niklas from other events. Firstly, its late occurrence date during the European windstorm season and secondly, in Germany virtually every part of the country experienced damaging gusts in excess of 80 km/h. The last time Germany experienced damaging winds across such a broad area was during windstorm Kyrill in January 2007, although the winds then were even stronger.”

Luzi Hitz, CEO of PERILS, added; “This first loss report for Mike-Niklas provides loss data per country and for the first time includes loss data for Austria. Subsequent reports issued three, six and twelve months after the event will include updated loss figures per country, with the latter two reports also including loss data per CRESTA Zone and property lines of business. The datasets are made available via the PERILS Industry Exposure & Loss Database.”

The insurance industry loss for the two storms is likely to rise, as they typically do, but at this level it will not be a dramatic hit to the reinsurance industry. It is unlikely to trouble any catastrophe bonds at this level, given their trigger point is typically set higher.

There could be industry loss warrants (ILW’s) or other reinsurance contracts which have ILS fund collateralized participation which attach at the €1 billion level. However, even that is a low trigger point so such deals are likely few in number.

The storm therefore has the potential to erode some aggregate reinsurance layers, potentially hit a few insurers to the degree they need to call on some reinsurance assistance, and maybe affect some ILS funds. However any loss will be minimal given the level that collateralized covers typically attach.

Windstorm Mike-Niklas, maximum gust values in km/h: Mike-Niklas occurred between 29 March and 1 April 2015 and caused significant losses in Germany, and to a lesser extent in Austria, Belgium, the Netherlands, Switzerland and the United Kingdom.