Reinsurers face US$775M hit from trans-Tasman disasters

Global reinsurers face US$775M hit from trans-Tasman disasters

By Paul McBeth

March 15 (BusinessDesk) – Global reinsurers are facing losses of as much as US$775 million after last month’s Christchurch earthquake, and Cyclone Yasi devastated Australia’s Queensland in January.

Bermuda-based reinsurer Montpelier Re Holdings expects a net loss of US$75 million from the quake, which killed at least 166 people and wreaked as much as $15 billion worth of damage to the country’s second-biggest city. Its cost estimate assumes an industry-wide loss of US$12 billion. That’s on top of the US$15 million cost from Australia’s flooding in January and an as-yet unquantified loss from last Friday’s earthquake and tsunami in Japan.

Montpelier Re has one of the smaller exposures to New Zealand’s quake, with Transatlantic Holdings facing a US$200 million hit from the trans-Tasman disasters. PartnerRe Ltd. expects a loss of between US$180 million and US$240 million, and Hannover Re has flagged a 150 million euro hit from the New Zealand disaster. Validus Holdings, which was the first reinsurer to put a dollar figure on the event, expects a loss of between US$25 million and US$50 million.

Yesterday, Prime Minister John Key told reporters the Earthquake Commission has less than $1 billion of disaster insurance available to it after the September and February quakes, and has launched a Royal Commission of Inquiry into earthquake building codes and the collapse of the Pyne Gould Corp. and CTV buildings.

That comes before the reinsurers start counting the cost of Japan’s tsunami, which has killed thousands of people and sparked fears of a nuclear meltdown after three of the nation’s reactors were damaged by the 8.9 magnitude earthquake.

The Bank of Japan poured 15 trillion yen into the economy and expanded its asset buying fund by eight times to 40 trillion yen to shore up the nation’s markets.

(BusinessDesk)

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