June 3 (Bloomberg) -- German insurers declined in Frankfurt trading on concern some of the country’s worst floods in more than 50 years will erode earnings.
Munich Re, the world’s biggest reinsurer, slid as much as 3.9 percent to 139.01 euros, the lowest intraday price since March 5. The stock fell 2.6 percent as of 11:57 a.m. Smaller competitor Hannover Re was down 2.9 percent, while Allianz SE, Europe’s biggest insurer, retreated 1.5 percent.
Floods, which wreaked havoc across central Europe at the weekend, worsened in eastern and southern parts of Germany today as vast areas of the historic center of Passau, where the Danube, Inn and Ilz rivers converge, lay under water. Soldiers were deployed to assist citizens in the states of Saxony, Thuringia and Bavaria. The deluge recalled images of flooding in 2002, which ruined harvests, prompted mass evacuations, and damaged buildings, including the 19th century Semper Opera in Dresden.
“There’ll be some losses, but they’re unlikely to be out-sized,” Ben Cohen, an analyst at Canaccord Genuity Corp. in London, said today by phone. “The caveat is that it’s still early days and the weather could change and the rainfall could increase.”
Cohen recommends investors buy shares in Allianz and Munich Re and has a hold stance on Hannover Re.
Almost twice as much rainfall as usual last month made it the second-wettest May since records began in 1881, according to Deutscher Wetterdienst, Germany’s national meteorological service.
Water levels of the Danube exceeded the 12.2 meters (40 feet) measured in 1954, and are expected to reach peak levels of 12.5 meters around midday, Stefan Zoller, a spokesman for the Bavarian state environment ministry, said.
DWD forecast further heavy rainfall between the eastern state of Saxony and the Bavarian Alps in the south in the course of the day.
Insurance claims for 2002 floods in central and eastern Europe totaled $3 billion, according to Munich Re.
Losses for the insurance industry will probably be lower than during previous record floods as municipalities have improved their protection and the waters are affecting rural areas more than cities, said Cohen.
Bavaria has spent 1.6 billion euros ($2.1 billion) on flood protection since 1999 and is investing a total 3 billion euros by 2023, according to the Environment Ministry.
“There’s a better level of understanding after the 2002 floods in Germany,” said Cohen. “People are better prepared.”
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