What’s New: In Brief (January 29, 2007)

Hannover Re says it expects losses in the range of EUR120-180 million (Cdn$180-275 million) from winter storm Kyrill.
Many of the losses come from claims originating in Germany, the company reported in a press release.
Winter storm Kyrill swept across large parts of Europe on Jan. 18-19, 2007, causing insured losses in the order of EUR4 to 7 billion, Hanover Re reported.
“The exact scale of insured damage cannot yet be reliably assessed in view of the multitude of small- and medium-size losses and the large number of countries affected,” Hanover Re reported on a Web posting.
The reinsurer reported that the total loss amount “was alleviated by the ‘K5’ risk securitization, which had been expanded to US$520 million as of Jan. 1, 2007.”
“Even after ‘Kyrill’ we are within the bounds of our loss expectations,” Hanover Re CEO Wilhelm Zeller said in a statement. “This severe storm will have a favourable effect on rate movements in European catastrophe reinsurance in the coming year.
“‘Kyrill’ brought home to European insurers that wind is just as much a force to be reckoned with in Europe as it is in the United States.”

Allianz’s stake in Munich Re could be reduced from 9.4% by about 4.5%, following an announcement by Allianz that it intended to make “an early redemption of 64.35 % of the BITES bond issued in February 2005 with Munich Re shares.”
This partial redemption means that each outstanding BITES bond will be reduced to 35.65%, Allianz reported in a press release. “The number of outstanding bonds will remain unchanged.”
Allianz said the number of Munich Re shares used to redeem the bond would be based on the averages of the DAX index and the Munich Re share price during a 20-day reference period starting on Feb. 1 and ending on Feb. 28, 2007.
“The redemption value has been fully hedged with forward contracts,” Allianz reported. “Hence, Allianz expects the partial redemption not to affect the price of Munich Re shares.”
The BITES index-linked exchangeable bond was issued Feb.18, 2005, with a principal amount of EUR1.3 billion euros (Cdn$1.99 billion). The current market value of the bond, which matures on Feb. 18, 2008, amounts to approximately EUR2 billion (Cdn$3 billion).