Disaster could wipe out insurers’ capital reserves

LOSSES from the Japanese earthquake will reduce insurers’ capital reserves, insurance brokers said yesterday, as sector shares continued their sharp declines on fears the disaster’s size could grow.

The cost of the quake to the industry, expected to range up to $35bn (£21.7bn) according to AIR Worldwide, will be in addition to some $20bn in catastrophe claims over the past six months, wiping out its budget for natural disasters, said David Flandro, global head of business intelligence at Guy Carpenter, the world’s second-largest reinsurance broker.