Munich Discusses Investment Loss Spiral International Editor


It has been called “a perfect storm” for the insurance industrylosses on both the asset and the liability sides of the balance sheet. The German market demonstrates a microcosm of such a storm, where some of the major players are taking double hits from the stock market as well as their underwriting.

A case in point is Munich Re, which bolstered reserves for its American Re subsidiary in July by $2 billion and has estimated that its World Trade Center loss for the Munich Re group will come to $2.6 billion. Between Dec. 2000 and December 2002, Munich Res net assets fell from 44 billion euros ($47.2 billion at current exchange rates) to 16 billion euros ($17.2 billion), which was entirely due to investment values, according to estimates by equities analysts. Since Dec. 2002, analysts estimate that investment values have wiped another 3 billion euros off Munich Res net assets.

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