German reinsurer Hannover Re expects a net loss of in the range of €200 million in the first quarter of 2023 as a result of the devastating earthquakes in Turkey and Syria, which together with losses from the severe weather in New Zealand, has eroded much of its major loss budget for the period.
In a recent media call discussing the reinsurance company’s full year 2022 results, Sven Althoff, Member of the Executive Board, Property & Casualty, commented on the Q1 2023 loss experience, after the firm exceeded its full year major loss budget once again in 2022.
On the Turkey and Syria earthquakes, Althoff said that Hannover Re followed the news with dismay and expressed sympathy for those affected.
In terms of losses, Althoff stressed that it is still very early to determine reliable estimates for the full extent of the disaster, but did provide an estimate for Hannover Re.
“I would assume a net loss in the range of €200 million for us as of today in the first quarter, and this is based on an insured market loss estimate in the region of €3.5 to €4 billion,” said Althoff.
“Together with the severe tropical storm and the floods in New Zealand, the net losses from both events should result in a high utilisation of our major loss budget for the first quarter, which stands at €356 million,” he added.
So, the net earthquake loss has eroded more than 56% of Hannover Re’s Q1 2023 major loss budget, and while it’s currently unclear how costly the weather events in New Zealand will be for the firm, it’s clear that Althoff expects much of the major loss budget to be eroded from these events.
Of course, the first-quarter isn’t over yet, so there’s potential for additional losses in the remaining weeks, which could see losses exceed the budget in Q1 2023.
In its results announcement this morning, Hannover Re revealed that the net cost of large losses in 2022 surpassed expectations for the sixth consecutive year. All in all, losses reached €1.7 billion, which is around €300 million above budget for the year.
In response, Hannover Re has increased its major loss budget for 2023 to €1.725 billion.
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