Hannover Re anticipates US$300 million loss

Hurricane ‘Katrina has heavily impacted reinsurer’s including Hannover Re, which estimates its net losses before tax to reach around US$314 million.
Even though the Company says Katrina may be the “most expensive ever natural disaster suffered by insurers in industry history,” it still expects its “return on equity after tax will remain in double digits.”
Hannover anticipates total insured losses to currently be approximately US$30 billion.
“The financial year had already witnessed an above-average intensity of major claims prior to Hurricane ‘Katrina,'” the Company says in a statement.
For the quarter ended June 30, Hannover reported an actual expenditure on major losses of US$140.8 million (6.1% of net premiums). Financials however saw a turn for the worse in the third quarter due to repercussions of events such as Hurricane Dennis, damage to an oil platform in the Indian Ocean, several aviation claims, flooding in Mumbai, India and floods in the Alpine region.
As a resuolt, Hannover Re’s loss expenditure incurred to date is almost US$627 million. Consequently, the proportion of major losses relative to the total net premiums that Hannover expects to earn in the financial year is currently double the multi-year average and therefore, the Company lowered its 2005 forecasts.
Hannover now anticipates earnings to US$387.8 million rather than the US$540 to US$715 million forecast earlier this year.
“In view of the extraordinarily heavy burden of losses this is a very good performance,” CEO Wilhelm Zeller says. “It is our assumption that ‘Katrina’ – just like last year’s hurricanes – will have further favorable implications for the treaty negotiations as at 1 January 2006 and we expect to see additional significant hardening of prices and conditions in natural catastrophe and marine reinsurance.”