Reinsurance companies will have to bear the financial brunt of the damage Hurricane Charley left in its wake when it swept through the US state of Florida last week. But Allianz says it could be worse.
Hurricane Charley was the second worst hurricane in US history
Munich Re, the world's largest reinsurer has estimated that damage from Hurricane Charley in the United States will cost the industry up to €11 billion ($14 billion).
Hurricane Charley hit Florida at the end of last week, tearing across the region at speeds of 233 kilometers per hour, killing 16 people, devastating the region and leaving thousands of others homeless. It has been described as the worst hurricane since Andrew, which ravaged Florida 12 years ago, leaving 26 people dead and causing €16 billion worth of damage.
Whilst a spokesman for Munich Re said the company was estimating a maximum payout of a low triple-digit million dollar range, he also told reporters that "such an incident was not totally unusual for Munich Re." Share prices for the company climbed slightly following the announcement, regaining some of the 1.7 percent they lost following the storm.
Satellite view of Hurricane Charely
Meanwhile, insurance giant Allianz has estimated the negative impact on its results from the hurricane to be no higher than €50 million. The estimate is based on an inspection by the German company's US subsidiary, Fireman's Fund.
Reinsurers are generally harder hit by natural disasters because primary insurers can pass a large part of damages on to them. That said, the drastic effects of Hurricane Andrew 12 years ago led to the creation of state insurance pools, which were designed to reduce the effects for both primary and re-insurers.
Earlier today, Allianz announced its half year results, painting a generally healthy picture of the company's immediate future. Speaking in Munich on Monday, CEO Michael Diekmann said: "We are looking to the future with optimism, our group is en route to reach our high targets." In the first six months of 2004 the company profit was up to €1.3 billion compared to €146 million over the previous year.