Global reinsurance giant Munich Re has said that it currently expects claims expenditure from the severe winter weather conditions that affected the U.S. last month to reach the mid triple-digit million euro range.
Winter storm Uri resulted in significant disruption across a number of southern U.S. states in February, especially Texas, which faced record-low temperatures and experienced several inches of snow.
So far, insurance and reinsurance industry loss estimates for the storm have varied, with Karen Clark & Company (KCC) raising its estimate to as much as $18 billion back in February, while AIR has said that losses would exceed the $10 billion mark.
More recently, insurance and reinsurance broker Aon said that the total economic cost of the severe winter weather conditions will surpass $10 billion, while analysts warned that the unprecedented level of losses from the event could drive another above-average catastrophe year for re/insurers.
In its annual report published today, Munich Re, one of Europe’s major four reinsurers, commented on the extreme cold spell in February.
“As there is still a very high degree of uncertainty at this stage, precise claims forecasts are not yet possible. In consideration of the great uncertainty, Munich Re currently expects claims expenditure in the mid triple-digit million euro range,” said the firm.
For primary players, analysts feel that despite the significant damages caused by Uri, the robust use of reinsurance protection is expected to mitigate the hit and help carriers absorb the shock.
And, while there’s fears the severe winter weather could erode reinsurers’ nat cat budgets for the opening quarter of the year, it’s also been suggested that Uri losses will sustain reinsurance rates through the April, June and July renewals.
After a difficult 2020, which saw numerous reinsurers produce weaker results owing to large losses, notably from the COVID-19 pandemic, the impact of Uri so early in the year is yet another challenge to navigate.
