Swiss Re Estimates Hurricane Ivan, Typhoon Songda Claims Around $300 Million

Swiss Re announced that, based on current estimates, it expects its claims related to Hurricane Ivan and Typhoon Songda to be approximately $300 million before tax.

The bulletin noted that these estimates are in addition to the estimated $290 million before tax aggregate claims for Hurricanes Charley and Frances.

The world’s other major renisurer, Munich Re, has made no formal announcement, but has indicated that it expects claims from the three U.S. hurricanes to be around 500 million euros ($612 million).

Swiss Re indicated that “given the high frequency and severity of this year’s storm season,” it may “use some of its claims equalisation reserves to absorb part of the financial impact of these events.”

The bulletin, which was issued before Hurricane Jeanne hit Florida (See related article), noted: “Hurricane Ivan was the third severe hurricane within six weeks to hit the Caribbean and the U.S. From 6 September to 14 September, Ivan hit a number of Caribbean islands and at its strongest was a category 5 hurricane with wind speeds of up to 280 km/h [175 mph]. On 16 September, Ivan made US landfall as a strong category 3 hurricane 200 km [125 miles] east of New Orleans, causing significant damage in Louisiana, Alabama, Mississippi and Florida.” Industry insured losses for the U.S. and the Caribbean are estimated to be in the range of $3 to $8 billion. Swiss Re estimated its claims related to Ivan to be $110 million and $80 million for the U.S. and the Caribbean respectively.

Songda was the seventh typhoon to strike Japan this season. It swept over the Japanese island of Okinawa with winds of up to 86 mph (144 km/hr) before making landfall on the Japanese mainland on 7 September near Nagasaki. Swiss Re estimates its claims to be in the range of $110 million – based on an estimated industry insured loss for Typhoon Songda of between $2 and $4 billion.

Swiss Re cautioned that “considerable uncertainty exists in these preliminary claim estimates.” It said that if they remain unchanged it would likely “use part of its claims equalisation reserves in 2004.”

It noted, however, that it “expects that the frequency and severity of this year’s storm season will have a positive effect on renewing reinsurance rates-” proving once again that “it’s an ill wind that blows no man good.”