German reinsurance giant Munich Re said that it is expecting its losses from the recent US winter storm and extreme freezing weather event to be in the mid hundreds of millions of Euros.
The reinsurance carrier is the first major player to disclose anything on the recent winter weather event, mentioning its expectations for claims in its annual report that was published today.
The company said that the winter weather which particularly affected the state of Texas led to substantial frost damage in particular.
However, the reinsurance firm said that the “great uncertainty” associated with the winter weather event means that accurate estimates of claims are challenging and so the best it can do is provide a rough estimate.
Munich Re’s rough estimate is for “claims expenditure in the mid triple-digit million euro range.”
That suggests something perhaps in the EUR 300 to 600 range, at which level it is possible Munich Re’s retrocessional reinsurance protections may take a small share.
The reinsurers sidecars would perhaps be more likely to participate in the losses from the event, being structured on a quota share basis and covering natural catastrophe risks, which could expose some insurance-linked securities (ILS) investors to the loss event.
Sidecars and quota share reinsurance arrangements are expected to be a source of losses from the winter weather event for some ILS investors.
In addition, we understand some start-up traditional reinsurers may also find themselves a little more exposed due to their focus on quota shares at the January renewals.