Reinsurer Munich Re has announced that the catastrophe events in Australia and New Zealand which occurred in the first two months of 2011 have already caused a claims burden of around $1.5 billion. The New Zealand earthquake is estimated to have cost them around $1 billion and the flooding in Australia and Cyclone Yassi approximately $500m. That’s an expensive start to the year.
Munich Re’s profit target for 2011 is around €2.4 billion. They say that this can now only be achieved if random major losses remain below the average to be expected over the course of the rest of the year.
We expect to hear similar reports from the other major global reinsurers as they come to terms with the amount of insured losses already suffered this year, many shareholders will be hoping for another benign hurricane season and no more major events. Munich Re has a particularly high market share in Australia and New Zealand so it’s possible they could look at ways to transfer some of that risk to the capital markets in future.