According to Munich Re, Comparatively Few Major Natural Catastrophe Losses in First Half-Year; Harsh Winter Impacts U.S.

  According to Munich Re, Comparatively Few Major Natural Catastrophe Losses
  in First Half-Year; Harsh Winter Impacts U.S.

Business Wire

MUNICH -- July 9, 2014

The statistics for natural catastrophes for the first half of 2014 have been
marked by pleasingly low levels of global claims. Overall economic losses of
US$ 42bn and insured losses of US$ 17bn to the end of June were considerably
below the average for the past ten years (US$ 95bn and US$ 25bn respectively).
Thankfully, the number of deaths caused by natural catastrophes was also
comparatively low. However, towards the end of the year the natural climate
phenomenon El Niño may impact regions differently in terms of the number and
intensity of weather extremes.

During the first half of the year, 2,700 people died as a result of natural
catastrophes, which was much lower than is normal during the first six months
of a year (10-year average: 53,000). There were around 490 loss-relevant
natural catastrophes. The highest economic losses arose in the U.S. (35%),
followed by Europe and Asia (30% each).

Natural catastrophe statistics from the first half of 2014, as well as
analysis from Carl Hedde, Head of Risk Accumulation at Munich Re America, Dr.
Peter Hoppe, Head of the Geo Risks Research unit at Munich Re, and Dr. Robert
Hartwig, President and Economist of the Insurance Information Institute, are
available at:

“Of course, it is good news that natural catastrophes have been relatively
mild so far,” said Torsten Jeworrek, Munich Re’s Board member responsible for
global reinsurance business. “But we should not forget that there has been no
change in the overall risk situation. Loss minimization measures must remain
at the forefront of our considerations. They make absolute sense from a
macroeconomic perspective, as lower subsequent losses mean that they mostly
generate savings of several times the investment amount. And they protect
human lives.”

The effect of loss susceptibility on claims was clearly demonstrated by two
snowstorms in Japan. These storms in February, which hit Tokyo and central
Japan in particular, brought overall losses of around US$ 5bn and insured
losses of more than US$ 2.5bn, and were the most costly natural catastrophe
worldwide in the first half of the year. Snowfalls of up to a meter are very
unusual in the affected provinces in Japan, though they would cause very few
problems in other countries. There were numerous accidents, and the roofs of
many halls and greenhouses collapsed under the weight of the snow.

The record winter in North America also caused significant losses, with
extremely cold temperatures and heavy snowfalls over a longer period in many
parts of the U.S. and Canada. The losses from various blizzards totaled around
US$ 3.4bn. The most costly snowstorm was in the first week of January: losses
for this storm alone totaled US$ 2.5bn, of which US$ 1.7bn was insured. In
many instances the harsh winter also had a heavy impact on business, as
companies were forced to stop production. At the end of January, a blizzard
brought the Atlanta metropolitan area almost to a standstill, even though only
a few centimeters of snow had fallen. Snow and ice made the highways
impassable, as there was a lack of snow-clearing equipment for a city unused
to such conditions.

“The harsh winter in the Midwest and on the East Coast once again exposed the
vulnerability of infrastructure in the U.S. In many cases, there were power
outages for long periods, and economists estimate that the cold winter also
contributed to negative economic growth in the first quarter,” said Tony
Kuczinski, CEO and President of Munich Re America, Inc. “Our industry and
government must work together to encourage and facilitate greater investment
in infrastructure projects that protect communities from loss. Consumers must
be informed about the natural catastrophes they are exposed to; what they are
or are not insured for; and how to protect their homes and businesses to
withstand locally occurring natural hazards.”

According to Peter Höppe, Head of Munich Re’s Geo Risks Research Department,
there is a link between the weather extremes in the northern hemisphere this
winter. “These extremes – with heavy winter conditions in North America and
Asia, and the extraordinarily mild winter across large parts of Europe – were
due to significant and lengthy meanders in the jet stream,” said Höppe. “And
scientists are still having intense debates about whether such sustained
changes to patterns in the jet stream – and therefore also the frequency of
such extreme and persistent weather conditions – might increase in the future
due to climate change.”

The mild winter in Europe contributed to the heavy floods in England that
lasted into February. As it was mainly rural areas that were affected, overall
losses remained within an acceptable limit of US$ 1.3bn (€960m) and insured
losses were around US$ 1.1bn (€800m).

In May, heavy flooding in the Balkans as far east as Romania caused very high
economic losses. It is not unusual to have intense rainfall in these countries
in the spring, but the low-pressure system Yvette produced abnormally heavy
and persistent rainfall. In many places, precipitation reached the highest
levels ever registered since records began more than 100 years ago. High flood
levels, particularly on the rivers Sava, Bosna and Danube caused overall
economic losses of US$ 4bn (€3bn), making this the second most costly natural
catastrophe in the world in the first half of the year. However, the
relatively low level of insurance penetration meant that insured losses were
not very high.

A storm front that passed over western Germany on 9 June caused high insured
losses. There was localized heavy damage caused by wind squalls and
hailstones, particularly around Düsseldorf. Overall, insured losses were US$
890m (€650m), and overall losses amounted to around US$ 1.2bn (€880m). The
storm front had previously passed through France and Belgium, causing major
damage in the Yvelines département  of France. Overall losses in the various
countries amounted to US$ 3.1bn (€2.3bn), of which US$ 2.5bn (€1.8bn) was

The tornado season in the U.S., which peaks from May to July, has been below
average so far. The U.S. weather agency NOAA recorded 721 tornadoes until end
of June, in comparison to an average of 1,026 in the years 2005–2013. However,
some tornado outbreaks caused significant damage. Videos filmed on 17 June
showed an extremely rare twin tornado in the State of Nebraska. The two
tornadoes were both classified at the second-highest scale 4, with wind speeds
of over 260 km/h, and they caused serious damage in the small town of Pilger.

In the night of 4 July, the first named storm of this year’s hurricane season,
Hurricane Arthur, made landfall on North Carolina’s barrier islands as a
category 2 hurricane with wind speeds of reportedly up to 100 mph. Luckily,
the storm did not affect the U.S. mainland dramatically. “Hurricane Arthur
again made clear how important it is to be prepared for such weather extremes.
Arthur showed that nobody should think that risks have vanished only because
the recent hurricane seasons were comparatively calm. The risk has not
changed, and it remains important to invest in improving the resilience of
buildings and infrastructure, in order to reduce losses and the loss of lives
caused by such events,” Höppe said.

Over the rest of the year, weather events will probably see increasing impact
from ENSO, a naturally occurring phenomenon that involves fluctuating ocean
temperatures in the equatorial Pacific. “With the contrary effects of El Niño
and La Niña, ENSO can influence weather patterns in many parts of the world,”
said Höppe. “It currently looks as though a moderate El Niño will develop by
the autumn, with warm water from the South Pacific moving from west to east,
thus shifting wind systems and precipitation across the Pacific basin.”

Hurricane activity in the northern Atlantic normally decreases during El Niño
phases. The number of typhoons in the northwest Pacific usually increases, but
they make landfall more rarely. Tornado activity increases in the USA. “This
gives a different distribution of losses across regions. Globally, our loss
database NatCatSERVICE records no significant differences in overall losses in
moderate El Niño years when compared to neutral years, whereas losses are
significantly lower in years with a strong El Niño,” said Höppe. The stronger
the El Niño, the more likely it is that there will be a La Niña in the
following year, when hurricane activity tends to increase.

Note: Charts, statistics and an infographic on the El Niño phenomenon can be
downloaded at

Munich Re stands for exceptional solution-based expertise, consistent risk
management, financial stability and client proximity. This is how Munich Re
creates value for clients, shareholders and staff. In the financial year 2013,
the Group – which combines primary insurance and reinsurance under one roof –
achieved a profit of €3.3bn on premium income of over €51bn. It operates in
all lines of insurance, with almost 45,000 employees throughout the world.
With premium income of around €28bn from reinsurance alone, it is one of the
world’s leading reinsurers. Especially when clients require solutions for
complex risks, Munich Re is a much sought-after risk carrier. Its primary
insurance operations are concentrated mainly in the ERGO Insurance Group, one
of the major insurance groups in Germany and Europe. ERGO is represented in
over 30 countries worldwide and offers a comprehensive range of insurances,
provision products and services. In 2013, ERGO posted premium income of €18bn.
In international healthcare business, Munich Re pools its insurance and
reinsurance operations, as well as related services, under the Munich Health
brand. Munich Re’s global investments amounting to €209bn are managed by MEAG,
which also makes its competence available to private and institutional
investors outside the Group.


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unknown risks, uncertainties and other factors could lead to material
differences between the forward-looking statements given here and the actual
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Media Relations U.S.
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