As more companies report estimated losses for the March 11 Japan earthquake and tsunami, a couple of Bermuda executives say that a market turn is beginning to occur.
Everest Re Group says it expects losses from the event to be about $320 million, assuming a $25 billion industry loss.
Aspen Insurance Holdings says its losses will be approximately $160 million, assuming a $30 billion industry loss. The company said the loss represents 5 percent of shareholders' equity as at Dec. 31, 2010.
Speaking to the event's impact on the market cycle, Aspen CEO Chris O'Kane says the quake and other first-quarter catastrophes, combined with low investment returns and the change in exposure modeling from RMS's latest release, will combine to improve pricing for catastrophe-exposed property lines. "Up to 35 percent of our 2011 business could consequently be subject to meaningful positive price changes," O'Kane says.
Everest Re Chairman and CEO Joseph V. Taranto echoes those comments, stating, "Given the frequency and severity of recent events, we expect market pricing to firm worldwide for property-catastrophe capacity."
Among other companies discussing the impact of the Japan quake, Alterra Capital Holdings says it expects losses of between $60 million and $100 million for the event, assuming industry losses of between $20 billion and $35 billion. The loss would represent between 2.1 percent and 3.4 percent of Alterra's 2011 opening shareholders' equity, which the company says is within its normal risk tolerances for natural-catastrophe events in the region.
Allied World Assurance says losses will likely be about $75 million—which the company says is within its normal risk tolerances.
All loss estimates are pretax and net of reinstatement premiums.
For the entire event, modeler Risk Management Solutions (RMS) issued its first insured-loss estimate last week of between $21 billion and $26 billion, including both property and casualty and life and health claims.
RMS says it estimates property losses of between $18 billion and $26 billion.
Robert Muir-Wood, RMS's chief research officer, says estimating losses is complicated not by the property damage itself, but rather determining insurance take-up rates and restricted terms of coverage. "Residential and commercial earthquake insurance was purchased in areas where people perceived the threat, but the Tohoku earthquake was not an event they were led to expect."
RMS notes: "The highest uncertainty in loss estimates for the Tohoku earthquake relates to the degree to which corporations are successful in claiming under contingent business-interruption protection. The disruption in the global supply chain of critical parts for just-in-time manufacturing is already leading to downstream interruption in manufacturers' operations in key battery, flash memory, mircrochip and automotive production, both in Japan as well as in the U.S. and Europe."
Last month, modeler EQECAT estimated losses for the event to fall between $12 billion and $25 billion, and AIR Worldwide narrowed its loss estimate to between $20 billion and $30 billion. Previously, AIR had expected losses between $15 billion and $35 billion.
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