Reinsurance firm Munich Re has estimated that it will fall to a €1.4 billion loss for the third-quarter of 2017, as hurricanes Harvey, Irma and Maria, as well as other major losses including the Mexico earthquakes, are likely to cost the reinsurer €3.2 billion.
But even this level of major loss expenditure in the third-quarter, following the severe catastrophe losses that the industry has suffered during the period, is not expected to cause a full-year loss and Munich Re still expects to be able to profit from 2017.
Jörg Schneider, Chief Financial Officer of Munich Re, commented, “High losses from severe natural catastrophes are part and parcel of our business; that is why we are here. Our capital base remains very strong. We will continue to offer our clients full reinsurance capacity. Moreover, Munich Re has enough capital to take advantage of the opportunities this exceptional situation provides in terms of profitable growth.”
The three hurricane losses of Harvey, Irma and Maria alone are expected to result in losses of €2.7 billion after retrocession, the company said.
Add in the Mexico earthquakes and other major natural and man-made loss expenditure and the third-quarter loss bill rises to €3.2 billion.
As a result Munich Re says it will post a loss of €1.4 billion for the third-quarter period.
As well as catastrophe and major loss expenditure, Munich Re also announced that it expects to suffer adverse IFRS effects from the recapture of a life reinsurance treaty and, as had been forecast, the contribution to the quarterly result from ERGO is expected to be low.
As long as its business performs in-line with expectations throughout the rest of the year, Munich Re said it expects to make a full-year profit, although this is likely to be a close run thing we believe.