NU Online News Service, April 5, 11:39 a.m. EDT
XL Group says pretax losses from the Tohoku earthquake and tsunami will be between $190 million and $290 million.
The wide range, says XL, is due to the uncertainty that still surrounds the March 11 magnitude 9.0 earthquake and massive tsunami, including "whether coverage levels will be reached under certain policies."
Therefore, actual losses may be much different than this initial estimate, the insurer and reinsurer warns.
Headquartered in Ireland with executive offices in Bermuda, XL says about 70 percent of the loss is attributable to the company's reinsurance segment. The estimate is net of reinsurance and reinstatement premiums.
The announcement was made yesterday after the market closed. Shares of XL closed at about $25, up 0.89 percent from the previous close.
Due to speculation of an imminent hard market as a result of this event and others in the first quarter, analysts say XL Group could be among those to benefit from an uptick in premiums from a change in supply and demand.
Willis Re and analyst firm Keefe, Bruyette & Woods (KBW) do not see a global hardening of rates. A report by Morgan Stanley says it expects global property reinsurance pricing to turn positive in 2011.
A report from Guy Carpenter says first-quarter losses from Japan and other events—like the earthquake in New Zealand and flooding in Australia—leaves midyear reinsurance renewals in question. At the very least Guy Carpenter says it would "expect to see increased demand for reinsurance cover."
Catastrophe modelers put losses from the Tohoku quake and tsunami at between $12 billion and $30 billion. Industry prognosticators say losses from all events in the first quarter could fall in the range of $27 billion to $60 billion.
XL Group also says it has opened a new property and casualty subsidiary in Shanghai, China.
The office, XL Insurance (China) Co. Ltd., opened late last week, offers products and services in property, casualty, specialty and professional lines. The office will be led by Zheqiang "Al" Xie, who will be chairman and CEO of the subsidiary.
He brings 20 years of experience in the Chinese insurance industry. He began his career with the People's Insurance Company of China (PICC) in Beijing. Prior to joining XL Insurance, he held several management roles with Lloyd's in China, including setting up the Lloyd's representation in China and establishing Lloyd's full reinsurance operation, launched in Shanghai in 2007.
In a separate announcement, XL named Kadidja Sinz as country manager for France.
She succeeds Guy Lallour, who is retiring in May, the company said.
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