CLAIMS payments from the twin catastrophes in Japan are likely to cost global reinsurer Munich Re €1.5bn (£1.3bn), it said yesterday.
The huge loss has ripped through Munich Re’s 2011 catastrophe budget and caused it to abandon its full-year profit target of €2.4bn.
The estimated loss beat analysts’ forecasts for €1bn in claims from insuring other insurers’ coverage of the earthquake and tsunami.
“The earthquake was not only the strongest ever recorded in Japan: it was also the fourth most severe ever measured anywhere in the world,” said Munich Re’s reinsurance chief executive Torsten Jeworrek.
It has pushed Munich Re’s total losses over €2.5bn already this year – far higher than expected – after a spate of disasters such as floods and a cyclone in Australia and the Christchurch, New Zealand earthquake.
Munich Re said the estimate of claims from Japan was based on its internal modelling rather than from direct claims from insurers, saying it would be “many weeks” until the true cost became clear.
The claims will come from commercial business but not the accidents at the Fukushima nuclear power plant, it said.
But Jefferies analyst James Shuck said there was likely to be relief that the estimated loss was not bigger.
According to a Nikkei newspaper report today the Japanese government now expects total damage to reach ¥15 trillion to ¥25 trillion (£113-£189bn) – dwarfing the ¥10 trillion damages from the 1995 Kobe earthquake.
Disruption to the global supply chain also continued to ripple out from Japan yesterday, with General Motors cutting production at its engine factory in New York thanks to a shortage of parts and miner Rio Tinto warning that equipment delays could impact on its expansion plans in Australia.