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"Irma" pulls prices down from Zurich and Swiss Re News

Wednesday, September 6th, 2017 | Economy

Meanwhile meteorologists have issued a category 5 warning, the highest possible level. The shares of Swiss Re and Zurich Insurance are declining and are among the largest losers, but the duties are limited.
As of 10.20, Zurich will lose 1.2% to 279.1 CHF and Swiss Re 1.6% to 83.2 CHF. They were even more marked in the downturn: Swiss Re (-2.4%) and Zurich (-2.1%). A decline is also observed in the overall market (SMI). It slipped by 0.54%. International reinsurance companies also report: Munich Re (-0.6%) and Hannover Re (-0.8%). The fact that insurers across Europe are under pressure is also reflected in the industry index STOXX 600 Insurance (-0.7%).
Damages for Harvey at about 20 billion US dollars
Meanwhile, the extent to which the insured losses for Hurricane "Harvey" could be roughly the same. According to a report from Wednesday, analysts at UBS estimate this to be about 15 billion USD. For "Irma" they dare a first prognosis. It assumes an amount in the range of USD 20 billion. Analysts of the Deutsche Bank, on the other hand, claim that "Harvey" is in the range of USD 20bn, with approximately USD 7bn being covered by storm insurance from the US federal government.
Meanwhile "Irma" on the small Caribbean island of Barbuda is hit for the first time with top wind speeds of up to 255 kilometers an hour. The US mainland will reach "Irma" at the earliest on Saturday. According to Deutsche Bank analysts, the damage would be greatest if Irma hit the metropolis of Miami. They emphasize that it is still unclear whether the storm will not turn into Texas or be completely dissolved before its arrival on the US mainland.
Damages over a long-term average
As far as reinsurance is concerned, experts point to the below-average losses in the first half of 2017, which were below the long-term average. Accordingly, reinsurers remain under pressure in 2018 as far as prices are concerned. In its analysis, UBS writes that it expects at most a certain stabilization of prices through "Irma" – should the storm actually develop into a bigger damage.
Already on Tuesday Johannes Brander from the rating agency Standard & Poor's in Frankfurt explained: "An end of the price decline is not in sight." Even worse was the assessment of the S & P rival Fitch: The reinsurance premiums are expected to fall by 2018 according to this institute by up to 7.5%. "The price development depends very much on the course of the remaining hurricane season," said Fitch expert Graham Coutts with regard to "Irma".
The industry has been suffering from price erosion for years. In particular, new competition is driving the market, such as hedge funds and other financial investors, who are satisfied with lower returns in the low-interest rate than reinsurers at risk.


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