Australia climate disasters hit reinsurers’ earnings – Insured losses estimated at $5.5-7.5 billion

[Barrett808]

Earnings reports from global reinsurance firms over the past two weeks shed light on losses arising from the December and January catastrophic floods in Queensland, Australia. While insured loss estimates are preliminary, we believe they will impact reinsurers' earnings, not their capital. Nonetheless, the floods cap a higher-than-average year for catastrophe losses and will result in significant early catastrophe losses for 2011, which is credit negative for the global reinsurance sector.

Current estimates of insured losses for the Australian floods are in the range of $4-$6 billion. Additionally, Cyclone Yasi, which struck the region on 2 February, may add an additional $1.5 billion of insured losses. Because Australian primary insurers have heavily reinsured their risks, and the floods and Cyclone Yasi constitute as many as five separate loss events within their reinsurance treaties, global reinsurers are likely to bear a significant proportion of the overall insured losses. ...

Australia climate disasters hit reinsurers’ earnings – Insured losses estimated at $5.5-7.5 billion