EUROPEAN PLAYERS LOOK AT KATRINA IMPACT

European insurers and reinsurers have been reassessing their likely earnings this year in the wake of hurricane Katrina. Germany’s Hannover Re said that damage claims for the year were now likely to be higher than planned. The reinsurer had made its profit plans of between 430m and 470m euro contingent on its damage claims not being in excess of its multi-year average of 6% of p/c premiums. Yesterday it conceded that this figure was now likely to be breached. CFO Elke Koenig said that reinsurers’ exposure would be more than 50% of all claims from the storm, as occurred with hurricane Andrew in 1992. JP Morgan analyst Michael Huttner estimated that Hannover Re may have to pay out 161m euro while Swiss Re could face a bill of SFr615m. Swiss Re estimated that its losses would be in the region of $500m and that the insured losses from the hurricane would be about $20bn. It noted that its natural catastrophe claims for the year to date were about SFr1bn and that natural catastrophe premiums for the full year would be about SFr1.4bn. Analyst Fox-Pitt, Kelton did not think that the event was likely to be “market-turning” across all non-life business. “Given the cyclical recovery in insurers’ earnings and balance sheets, as well as the rapid growth in surplus over the last few years, it would likely take a devastatingly large loss” of at least $50bn to turn the entire market, the analyst said.