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After Hurricane in the US – Swiss Re and Zurich on the stock exchange under pressure News

Monday, August 28th, 2017 | Economy

However, taxes are limited – as is the case with Swiss Re and Zurich Insurance. It is still not clear how much damage the industry will have. At the same time, the catastrophe could stabilize the pressure on prices.
Swiss Re will lose 0.7% to CHF 87.25 and Zurich to 0.89% to CHF 289.70. On the other hand, the overall market (SMI) slows by the contributions of the heavyweight Novartis by 0.4%. International reinsurers such as Hannover Re (-1.5%) and Scor (-1.4%) are even more pronounced, while the Munich Re's prime industry is down 0.9%.
Hurricane "Harvey" has left a trail of devastation in the US state of Texas during the weekend with top speeds of 215 kilometers per hour, causing serious flooding. Daniel Bishop of the Bank BaaderHelvea believes that "Harvey" has the potential to become one of the ten most expensive cyclical catastrophes in the United States.
Market remains cautious
On the market, initial estimates of the damage caused by "Harvey" are taken with caution at this early stage. For example, the reinsurance broker BMS has estimated the overall economic losses to well over USD 10 billion, of which about 5 billion are likely to be insured. Experts from the analysis service CoreLogic meanwhile alone with insured property losses in the volume of 1 to 2 billion USD. For reinsurers and insurers it is still much too early to provide sound data on the extent of the damage.
On the other hand, the "Harvey" losses will have the effect of further stabilizing the price deceleration that has been going on for years, at least in some property and liability segments, Bishop said. According to the JLT reinsurance broker's calculations, disaster reinsurance prices are currently 33% below the 2013 level.
That it is because of "Harvey" to a trend change in price development comes, but Guilhem Horvath of Exane BNP Paribas does not. Although the reinsurance capacity offered to cover catastrophe losses will fall and the demand for such coverings will increase at least in the affected regions, Hurricane "Harvey" will probably not lead to a worldwide turnaround.
At BNP Paribas, the analysts assume – based on data from past catastrophes in Texas – that Swiss Re will be among the reinsurers most affected by the "Harvey" catastrophe. In addition, in the first half of the year, the group used more of the capital budgeted for disasters compared to the competition. The bank confirms the "underperform" rating, also because of the prevailing price pressure on the market.


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