Harvey, Irma and Maria will take their tolls on the insurance and reinsurance giant.
One of the largest insurers in the world has stated that hurricanes would cause it to suffer a loss as Munich Re profits prove inadequate. The company said its 2017 third quarter would record a loss as a result of Hurricanes Harvey, Irma and Maria.
The insurer predicts that the hurricanes would cost $3.1 billion in its covered insured damages.
These damages occurred in the United States and the Caribbean and the size of the losses will exceed the third quarter Munich Re profits. According to the reinsurer, which provides insurance for other insurers around the world, the estimates they’ve released are “still fraught with considerable uncertainty.”
The reinsurer has also stated that it expects that the total Munich Re profits will be “small.”
“High losses from severe natural catastrophes are part and parcel of our business,” said Munich Re chief financial officer, Joerg Schneider. “We will continue to offer our clients full reinsurance capacity,” he added.
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The cost of the damages from the three hurricanes were topped off by other disasters such as the earthquakes in Mexico and the fires in California, the Midwest, western Canada and parts of Europe. The earthquakes alone are expected to have cost Munich Re $3.7 billion in the third quarter.
The insurer isn’t the first one to have announced that its profits were taking a hit by the natural disasters that have been particularly rampant in 2017, particularly in the form of hurricanes. For instance, Zurich Insurance, the Swiss reinsurer, estimated that those three major hurricanes that made landfall in the United States and the Caribbean would generate about $700 million in claims. Its losses are predicted to break the $620 million mark. Swiss Re’s forecasts regarding the hurricanes in addition to the Mexican earthquakes represent a loss of as much as $2.6 billion.
It’s more than clear that this will be a particularly damaging quarter to insurance companies and reinsurance companies and that the Munich Re profits won’t be the only ones taking a major hit as a result.