European Reinsurance Stock Still Pressured By Japan Quake
March 14 2011 - 6:06AM
Dow Jones News
European insurance and reinsurance shares were under renewed
pressure Monday on mounting concern over the safety of Japan's
nuclear power plants and following weekend claims estimates
suggesting Friday's devastating earthquake could be the sector's
costliest ever.
At 0900 GMT, Major players such as German reinsurer Hannover Re
(HNR1.XE) were 7.5% lower at EUR35.70, while Munich Re (MUV2.XE)
fell 4.3% to EUR106.80. German insurer Allianz SE (ALV.XE) was down
3.2% at EUR96.43, and Swiss Reinsurance Co. (RUKN.VX) fell 3.2% to
CHF50.05.
Allianz, Hannover Re and France's Scor SE (SCR.FR) reiterated
previous comments that it was too early to come up with loss
estimates. Scor was unable to say immediately if it had exposure to
Japan's nuclear plants.
Munich Re said in a statement Monday that while it was too early
to calculate potential losses that the insurance sector was
unlikely to be significantly hit by problems tied to Japan's
nuclear plants. Industry experts also said that the Japanese
government would likely bear the bulk of nuclear-related costs.
Chaucer Holdings PLC (CHU.LN), a Lloyd's insurer, was one of the
few insurance shares to make gains. It was up 0.5% at 54 pence
after saying Monday it doesn't expect any significant insured
losses from the Japanese earthquake. It said that its specialist
Nuclear Syndicate 1176 is one of a panel of insurers that provide
coverage to Tokyo Electric Power Company, the owner of two of the
three nuclear sites in the proximity of the affected
area--Fukushima Dai-ichi and Fukushima Daini--but that there was no
coverage in place for property damage or business interruption at
these two plants. At a third plant, Onagawa, owned by Tohuku
Electric Power Company, coverage for property damage is provided,
but earthquakes and tsunami are specifically excluded, it said.
UBS analysts said Monday they expect Hannover Re's losses to be
capped by its own reinsurance agreements, even though recent
natural disasters have already absorbed 50% of the company's 2011
major loss budget.
While the exact cost of the catastrophe won't be known for
months, Boston-based AIR Worldwide estimated Sunday the quake
caused insured property losses of $15 billion to $35 billion. If
claims come in at the middle of that range, the cost of the
disaster would surpass all other natural catastrophes except for
2005's Hurricane Katrina.
Nomura analysts estimated that Munich Re, Swiss Re and Hannover
Re could see around 3% to 6% of their capital absorbed by losses,
or between $300 million to $2.8 billion. "We are likely to see
material hits on earnings, but not capital events."
The area of the country most directly affected by the quake has
about $300 billion of insured property, according to AIR Worldwide.
An additional $400 billion of insured property lies in areas that
were less impacted but likely still sustained costly damage, said
Jayanta Guin, senior vice president of research and modeling at
Boston-based AIR.
-By William Launder; Dow Jones Newswires; +49 69 29 725 515;
william.launder@dowjones.com
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