Munich and Swiss rocked by quake revisions

Munich Re and Swiss Re, two of the world’s largest reinsurers, have increased their loss estimates from the earthquake that hit Chile in February.

Swiss Re announced at the end of last week that it expected claims from the quake, net of retrocession, to be $630m (£432.8m) before tax, up from $500m in its preliminary estimate on 10 March. The firm said the new estimate reflects more specific information from clients about damage to properties and businesses, and was still subject to change.

Swiss Re’s announcement closely followed a statement from Munich Re earlier in the week, which stated that the reinsurer had boosted its loss estimate from the Chile quake to $1bn after retrocession and before tax, up from the $700m it forecast at the end of April. The firm said providing a reliable claims forecast had been difficult because of low primary insurer retentions, the high proportion of facultatively reinsured production facilities and buildings, and ongoing business interruption losses.

Munich Re added that the number of losses was high – local insurance firms had received 190,000 claims notifications by the end of April.

The earthquake struck Chile on 27 February, causing heavy losses and triggering a tsunami. Munich Re put the total industry loss from the event at $8bn. Swiss Re estimates that industry losses from the quake will be between $4bn and $7bn.