Munich Re estimate $2.1 billion loss from Japan earthquake and tsunami

Munich Re estimates its losses resulting from the earthquake and tsunami in Japan will total approximately 1.5 billion euros (approximately $2.1 billion). As a result, the reinsurer will not hit its 2011 profit target of 2.4 billion euros (approximately $3.3 billion), a Munich Re release says.”For Munich Re, the first quarter of 2011 had already been marked by high losses from the earthquake in New Zealand, the floods in Brisbane and Cyclone Yasi in Australia,” a release says. “Now including the projected losses from the earthquake and tsunami in Japan, the major-loss burden from natural catastrophes amounts to over 2.5 billion euros (approximately $3.5 billion) after retrocession and before tax, thus far exceeding the volume to be expected for this period.”The initial loss estimate is based solely on modelling. Owing to the extent of the destruction, further possible aftershocks and difficult clearing-up operations, it will be many weeks before the losses are assessed and all the claims notifications from Japanese primary insurers have come in. The losses of Munich Re result mainly from covers in commercial business. With the exception of covers placed with mutual insurers, earthquake insurance for residential buildings is provided by the Japanese earthquake pool, and under federal regulations risks from the pool can not be transferred to the international reinsurance market. The impact on international flows of goods and supply chains from business interruptions suffered by Japanese industrial producers creates further uncertainties of the magnitude of the loss, the release adds.