NU Online News Service, March 19, 12:55 p.m. EDT

Sixteen global reinsurers have reported approximately $3.5 billion in estimated pre-tax net losses so far from the Chilean earthquake and European Windstorm Xynthia, according to a Moody's Investor Services update.

In its update on Reinsurers' catastrophe losses from the two events, Moody's said these losses are expected to be lower on an after-tax basis, likely in the range of $2.8 billion to $3 billion.

Moody's noted that catastrophe modeling firm estimates for the total insured losses for the Chilean earthquake--the fifth-strongest ever recorded--have ranged from $2 billion to $8 billion "reflecting the significant uncertainties associated with an earthquake of such intensity, including ultimate business interruption losses which are influenced by damage to power and transportation infrastructure."

Estimates by reinsurers, Moody's said, typically range from $4 billion to $8 billion, with one firm, PartnerRe, using an initial insured loss estimate range of $6 billion to $10 billion.

Aon Benfield, it its own released update, said it believes the insured losses from the Chile earthquake will not affect global or regional earthquake rates unless the losses grow materially by a factor of three times the current estimates. "Although it is a significant loss for the Chilean market, we do not foresee an impact to primary pricing and reinsurance pricing outside of Chile," Aon Benfield said. "This will demonstrate that, once again, reinsurance has functioned as designed, providing excellent risk transfer to insurers in a robust and deep market."

For Windstorm Xynthia, Moody's said catastrophe modeling firms estimate losses in the $1.4 billion to $4.2 billion range. Reinsurers, meanwhile, estimate losses between $2 billion and $4 billion, Moody's said.

Regarding both events, James Eck, vice president, senior analyst, Moody's said, "Global reinsurers are expected to bear a meaningful portion of ultimate insured losses from these events through both quota-share and catastrophe excess of loss reinsurance treaties with primary insurance company cedants."

But Moody's added, "In general, the losses are manageable from a capital perspective, with pre-tax losses...for the events ranging from about 1 percent of 2009 fourth quarter shareholders' equity on the low end to about 8 percent of equity on the high end, with an average of 3 percent."

Special Reports /

Reinsurers Report $3.5B In Chile Quake, Xynthia Losses

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