American and European reinsurance firms have seen their stocks plummet because of the Japanese natural disaster and safety concerns stemming from the damage to nuclear plants.Citi analyst Keith Walsh estimates we’ll be seeing up to $35 billion in insured property losses.
It should take several more days/weeks before insurers begin releasing loss estimates, however AIR Worldwide estimates that insured property losses from Friday’s earthquake will range between ~$15B and $35B implying this is already shaping up to be a major insurable event. $35B would imply the 2nd largest insured loss from a natural disaster in history. It is still early to determine broad pricing implications.
While the fate of the nuclear situation is still far from certain, what’s important to note for insurers is that the nuclear damage won’t count against them.
There have been several articles in the press discussing the possibility of nuclear meltdowns at Japan nuclear reactors. Based on our understanding, any potential damage from this type of an event is unlikely to have much impact from an (re)insurance perspective as insurance policies often exclude certain factors from coverage, such as exclusions on earthquake damage in the property insurance for reactors and exclusions on nuclear damage for homeowners’ insurance policies.
In a press release Munich RE declared that impacts from accidents in Japanese nuclear power plants are not likely to have a significant affect on private insurance industry and most of if it will likely be covered by the Japanese government.
The market however doesn’t seem to be paying him much heed. Big U.S. names this morning continue to be in the red:
- Flagstone Reinsurance down 3.63%
- Platinum Underwriters Holdings (US holdings) down 2.30%
- Montpelier Re (US holding) down 2.07%
European companies are down too:
- Swiss RE down 4.08%
- Catlin Group down 3.46%
- Munich RE down 2.79%
- Hannover RE down 2.50%
- Allianz SE down 1.91%