First half cat losses “comparatively low”, says Munich Re

Jul 16, 2012 – Natural catastrophes in the first half of 2012 caused USD $26 billion in overall global losses. Of that, about $12 billion was insured said reinsurer Munich Re.

The losses from January 1 to June 30 were “well below” the six-month average of recent years, said Munich Re’s report. Roughly 450 natural hazard loss events were reported in the first half of the year, above the average of 395. “However, at mid-year, there had been no major catastrophes like those of 2011. Thus, the previous year had been marked by the enormous losses from the earthquake in Japan and a number of quakes in New Zealand,” said a statement.

Last year, Munich Re reported that the first-half losses made 2011 the highest ever loss year on record, with a six month total of $265 billion in economic losses and insured losses of just under $82 billion.

This year’s first-half overall losses of $26 billion are almost a third of the ten-year average of $75.6 billion. Insured losses for the first half of 2012 amounted to $12 billion, compared to a ten-year average of $19.2 billion. While 3,500 deaths due to natural catastrophes were reported in the first six months, the death rate is well below the average of 53,000 for the last ten years.

Eighty-five percent of worldwide insured losses and 61 percent of overall losses occurred in the Americas, particularly in the United States. On average, about 65 percent of insured losses and 40 percent of overall losses stem from events in the Americas. An early start to tornado season in the U.S. caused man losses, including some in the billion dollar range.

“One fact that stands out from the statistics is the increase in the number of tornadoes registered as time goes on, but this is mainly due to better documentation,” said Peter H�ppe, Head of Munich Re’s Geo Risks Research unit. “However, overall in the USA over the past four decades, we can see a rise in losses from convective events, i.e. severe weather events with windstorm, tornadoes, hail, lightning and torrential rain � even when the figures are adjusted to take into account factors like increasing concentrations of values and inflation. One possible explanation could be changes in meteorological conditions, and particularly increased atmospheric moisture content, also due in part to climate change”, H�ppe continued.

“Losses in the first half of 2012 were comparatively low. It is in line with expectations that extreme and more moderate years will balance each other out in the course of time”, commented Torsten Jeworrek, Munich Re Board member responsible for global reinsurance. “The role of insurers is to set premiums appropriate to the risks in the long term, taking into account all such fluctuations. In this respect, insurers can also do something towards mitigating the loss burdens by providing comprehensive information and offering specific prevention incentives for reducing the vulnerability of buildings and infrastructure to damage.”

About Munich Re

Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. Munich Re creates value for clients, shareholders and staff alike. In the financial year 2010, the Group � which pursues an integrated business model consisting of insurance and reinsurance � achieved a profit of �2.4bn on premium income of around �46bn. It operates in all lines of insurance, with around 47,000 employees throughout the world. With premium income of around �24bn 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. Our primary insurance operations are concentrated mainly in the ERGO Insurance Group. With premium income of over �20bn, ERGO is one of the largest insurance groups in Europe and Germany. It is the market leader in Europe in health and legal protection insurance. More than 40 million clients in over 30 countries place their trust in the services and security it provides. 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 �193bn are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.