First-Quarter Disasters Cut Reinsurer Capital by 6.4%, Aon Says

Disaster claims including the record earthquake and tsunami in Japan cut the capital of reinsurers such as Munich Re and Swiss Reinsurance Co. by 6.4 percent in the first quarter, Aon Corp. (AON)’s reinsurance brokerage said.

Global reinsurer capital declined to $440 billion at the end of March from $470 billion three months earlier, “principally driven by the level of insured catastrophe losses,” Aon Benfield said in a report published today. It included both traditional and non-traditional forms of reinsurance capital.

Reinsurers, which help primary carriers such as Allianz SE (ALV) shoulder risks for clients, had their most costly first quarter because of natural disasters including the earthquake and tsunami in Japan, a cyclone in Australia and a quake in New Zealand. Insured losses in the period may exceed $52.6 billion, according to Aon Benfield. That compares with $40.6 billion for all of last year.

“Strong capital positions” enabled the 28 leading reinsurers including Munich Re, Zurich-based Swiss Re and Hannover Re, based in Hanover, Germany “to absorb substantial catastrophe losses over the last 18 months without consequent rating action,” Aon Benfield said. “However, the underlying operating environment remains challenging.”

Munich Re, the world’s biggest reinsurer, said last month it had a quarterly loss of 947 million euros ($1.4 billion) on claims related to the disasters, while Swiss Re, its largest rival, posted a loss of $665 million. Berkshire Hathaway Inc. (BRK/A), run by billionaire Warren Buffett, said natural disaster losses at its insurance units exceeded $1.6 billion in the first quarter.

To contact the reporter on this story: Oliver Suess in Munich Bureau at osuess@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.