Delayed notification of losses will push Munich Re's hurricane losses to nearly $1.8 billion, with third-quarter North America hurricane storm losses increasing to $600 million.
In making the announcement today, Munich said it now believes industrywide losses for Katrina will be $45 billion, $15 billion higher than the reinsurer's prior market estimate of $30 billion.
For the company itself, the German reinsurer said the after-tax impact of Hurricanes Katrina, Rita and Wilma is now likely to be 1.5 billion euros, or $1.8 billion.
Adjusting the figure to remove the impact of Wilma, a fourth-quarter storm, the after-tax estimate for third-quarter storms is now estimated to be 500 million euros, or $600 million, higher than the figure reported in last month's third-quarter earnings.
On Nov. 7, Munich indicated that third-quarter storms--Dennis, Emily, Katrina and Rita--would cost 1.1 billion euros, or $1.3 billion, after retrocessions and before taxes. On the same day, Munich said the after-tax impact on third-quarter results was 750 euros, or $889 million.
On a pre-tax basis, Munich today gave the following estimates for each of the major storms:
o Katrina--just over 1.6 billion euros, or $1.9 billion pre-tax. This raises the November estimate by 815 million euros, or $966 million.
o Rita--unchanged at 250 million euros, or nearly $300 million.
o Wilma--set at 330 million euros, or roughly $390 million.
The total pre-tax storm figure, almost 2.3 billion euros, or $2.7 billion, includes an incurred-but-not-reported provision for continued uncertainties of 600 million euros, or more than $700 million, Munich reported.
The company said that despite record losses from catastrophes--including the October earthquake in Kashmir--Munich expects to meet its targeted returns for 2005 and to pay a dividend of 3.1 euros, or $3.67, per share (up from 1.1 euros, $1.30).
Detailing some reasons for the delayed notifications and increased estimated Katrina losses, Munich said that the full extent of considerable flood losses covered under commercial and industrial policies emerged gradually, and that unrestricted access to New Orleans has only been possible since the beginning of December. The difficulty in gaining access to New Orleans caused delays in surveying business interruption and building losses, Munich said. It added that post-Rita and Wilma price and demand increases for building materials were another factor.
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