Harvey, Irma winds could topple German re-insurer's profits

Harvey, Irma winds could topple German re-insurer's profits”

The company said in a news release Thursday that it "might miss its profit guidance of 2 billion to 2.4 billion euros ($2.4 billion to $2.8 billion) for the year".

The combination of the two events is expected to result in high insurance and reinsurance industry losses, Munich Re said, adding that neither it nor the market can quantify the loss at this early stage. For the full year, it previously guided for an aftertax profit, including minorities, of between EUR2.0 billion and EUR2.4 billion ($2.4 billion to $2.86 billion). Irma followed a short time later, battering islands in the Caribbean before slamming into the Florida coast as a Category 4 storm.

"The business and risk strategy of Munich Re ensures that even after such severe natural catastrophes the Group has a sufficiently solid capital base to still be able to offer full reinsurance capacity to its clients", the company said. That's partly because it's been hard to get staff into the state after flooding.

The size of the losses could mean that investors in Munich Re's Eden collateralised reinsurance sidecars share in some of the impacts, as these provide the firm with retrocession as well as allowing it to earn fees from sharing its risks with institutional investors. The company's American depositary receipts tumbled in NY after the announcement, falling to $20.32, or 3.9 percent less than Tuesday's close.

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