Swiss Re on Monday became one of the first big reinsurers to give an estimate of how much superstorm Sandy could cost it, saying that it expected a pre-tax claims burden of about $900m from the storm.
The world’s second-largest reinsurer by premiums said that for the industry as a whole, the insured losses would be between $20bn and $25bn, towards the top end of forecasts provided by catastrophe modelling agencies.
However, Matthias Weber, Swiss Re’s chief underwriting officer, said that the forecast was subject to a higher than usual degree of uncertainty.
“The hurricane hit the densely populated northeast coast of the US. This led to prolonged power outages, disruption to public transport and damage to other infrastructure that have made recovery efforts very difficult. It also complicates the loss assessment process,” he said.
Analysts at Citi said that the estimate was “higher than the market was expecting, although still comfortably manageable in the context of very strong earnings so far this year”.
“We estimate that Swiss Re was [around] $0.7bn below its catastrophe budget at the third quarter. This implies that the Hurricane Sandy impact ($0.9bn) reverses this and consumes [about] $0.2bn of the remaining $0.5bn catastrophe budget for the fourth quarter.
“This leaves the group with [about] $0.3bn [of] catastrophe budget for further losses in 2012,” they wrote.
Swiss Re said earlier this month that, despite the storm, it remained on track to hit its annual financial targets.
Shares in the company were down 1.35 per cent at SFr65.80 in afternoon trading in Zurich.