Munich Re said it will probably take a hit of about 1.6 billion euros ($1.6 billion) after hurricane Ian led to massive damages in Florida, and warned reaching its full-year profit goal has become “significantly more challenging.”
The estimate of losses from the storm is “subject to substantial uncertainty,” the company said in a statement Friday. Shares of the reinsurer rose after saying it expects to post a higher-than-expected profit of about 500 million euros [$489.3 million] for the third quarter, helped by a one-off effect at its Ergo life unit.
Ian hit Florida in September and was one of the strongest hurricanes to ever make landfall in the US. It carved a trail of ruin across southern Florida, downing bridges, inundating roads and shattering homes. Insured losses have been estimated at more than $60 billion.
Swiss Re AG warned earlier this week that it will post a third-quarter loss and may not reach a profitability goal for this year because of claims tied to the storm.
Munich Re said reaching its target for a profit of 3.3 billion euros this year now depends on the “realization of currently anticipated positive one-off effects, particularly regarding investments.”
Shares of the company rose 1.1% at 1:32 p.m. in Munich, paring declines this year to 3.2%.
“The scale of Hurricane Ian’s losses, particularly in Florida, will likely mean insured losses will drift higher as inflation and litigation add to the toll,’ Bloomberg Intelligence analysts wrote in a note. “Hurricane Ian could turn out to be a record-breaking storm.”
The most expensive hurricane for the industry so far since 1970 was Katrina with $91 billion in insured losses, followed by Maria and Sandy with about $35 billion each.
At Munich Re, the losses from Ian add to a number of other headwinds in the wake of financial markets volatility and the war in Ukraine. In the second quarter, the company took a hit of almost $1 billion to its investment portfolio. It also wrote down the value of Russian and Ukrainian bonds by almost 700 million euros in the first quarter and booked war-related reinsurance costs in the three-digit million euro range.
Photograph: A destroyed house following Hurricane Ian in Fort Myers Beach, Fla., on Tuesday, Oct. 4, 2022. Photo credit: Eva Marie Uzcategui/Bloomberg
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