Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

PartnerRe suggest losses from tornadoes to impact insurance-linked securities


Bermuda based reinsurer PartnerRe has issued a preliminary estimate of the losses it expects to see due to the tornado outbreak that impacted the U.S. during the last week of April 2011. This spell of tornadic weather caused hundreds of deaths and widespread damage, the worst of which was when impacted the state of Alabama, particularly the city of Tuscaloosa.

PartnerRe expect to see losses of between $50m to $70m for this event and say that this loss estimate relates to “all reinsurance contracts and insurance-linked securities expected to be impacted by these events”.

PartnerRe are an active investor in catastrophe bonds and other types of insurance-linked securities. They made similar announcements after the earthquake in Japan and disclosed their exposure to cat bond losses at that time. It’s difficult to know whether they are suggesting that one of the cat bonds which we have reported to be exposed to the recent tornadoes could have been triggered (such as Residential Re 2009 or Mariah Re), or whether they are referring simply to the losses their investment portfolio will suffer from mark-t0-market losses triggered by the tornadoes.

As this loss estimate from PartnerRe only covers the late April spell of severe weather they are likely to see significantly more losses than this as the tornado season has continued to cause destruction and losses throughout May as well.

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