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July 8, 2013 4:56 pm
Swiss Re expects the floods that swept through much of central Europe last month to cause industry-wide insured losses of between $3.5bn and $4.5bn, and leave the Swiss reinsurer facing a claims burden of about $300m.
In early June, water levels on the Danube and Elbe reached, and in some places topped, the levels experienced during the last serious round of flooding in 2002, causing widespread damage in Germany, Austria, Hungary and the Czech Republic.
However, precautions taken in the aftermath of the 2002 floods – such as in Prague where the city centre now has mobile flood barriers – meant that this year’s damage was less extensive than it might otherwise have been.
“Thanks to timely prevention measures, large areas have been saved from the flooding,” said Matthias Weber, Swiss Re’s chief underwriting officer.
Thomas Dorner, an analyst at Citigroup, said that Swiss Re’s projections for industry-wide insured losses were “in line with most estimates, although we note that AIR has said losses of up to $5.8bn.”
He added that the cost to Swiss Re, which is the world’s second largest reinsurer by premiums, should be “comfortably absorbed”, especially as the group had not had to cope with significant losses in the first half of the year.
“For Swiss Re this loss represents less than 1 per cent of first-quarter book value or 6 per cent of 2013 profit before tax, making it a notable but not significant loss event for the group.” he told clients.
Shares in Swiss Re were up 2.14 per cent at SFr71.75 in afternoon trading in Zürich.
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