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EDITIONS
Thursday, 29 August, 2002, 19:39 GMT 20:39 UK
Insurers come clean on flood claims
Flooded street in Pirna, Germany
Few flood victims had insurance cover
Insurance giant Allianz is braced for claims of more than 800m euros from victims of Central Europe's floods.

The insurer said claims in Germany alone would hit 580m euros (371m; $571m).

But Allianz said that, thanks to measures to spread risks to reinsurers, its total payouts to claimants in Germany, Austria and the Czech Republic would amount to only about 550m euros.

The statement came as reinsurer Swiss Re, reporting a sharp slide in profits, estimated its potential insurance losses from floods at 250m Swiss francs (109m; $167m).

Rival Munich Re also on Thursday revealed a profits statement, showing a loss of 383m euros for the April to June period.

Cover neglected

Allianz has previously estimated the economic costs of this month's floods at 15bn euros for Germany alone.

But it said that the small number of flood damage policies taken out meant that the floods would "certainly not be a financial catastrophe" for insurers.

Allianz said on Thursday that the estimated 550m euro claims total represented "less than 2% of the total damage claims for all of 2002".

The firm said it faced claims of 120m euros from Austrian policyholders, and 115m euros from Czech flood victims.

Share impact

Swiss Re's damage estimate came as it revealed net profits of 118m Swiss francs for the first half of the year, stunning analysts who had forecast a 1.08bn Sfr figure.

The company blamed the data, which sent its shares down by more than 10%, on the fall in the stock markets, which had cut the value of its asset base.

"Negative global stock markets were the main reason for the reduced result," Swiss Re said, swallowing a 917m Sfr charge to account for the effects of the share slide.

Further share losses would "negatively impact" on results for the rest of the year, the firm warned.

Analysts reaction

But analysts took comfort from data showing strength in the firm's underlying business, with premiums rising 16% to 13.84bn Sfr over the six months.

"It is a disappointment, but not a disaster," said analyst Tim Dawson at banking group Pictet.

"The underlying life and health and property and casualty businesses were generally bright."

September 11 claims

Munich Re, which has a large US presence, blamed its loss largely a further $500m in claims related to the 11 September strikes.

The firm also announced a 1.5bn euro writedown on the value of its share portfolio, and warned that further reassessments might be needed later this year if stock market volatility continued.

The uncertainties made a reliable forecast of the firm's prospects for the rest of the year "too complex at the moment", chairman Hans Juergen Schinzler said.

Market reaction

The reinsurer Swiss Re's shares fell 13.7% while Munich Re's shares fell 4.42%.

Among insurance companies, the German giant Allianz suffered a 3.73% fall in its share price.

In London, Royal and Sun Alliance lost 3.79% and Prudential lost 5%.

in Paris, AXA fell 6.92%.


European havoc

Germany ravaged

Prague drama

Freak phenomenon?

FORUM

TALKING POINT
See also:

19 Aug 02 | Business
19 Aug 02 | Business
16 Aug 02 | Business
16 Aug 02 | Europe
15 Aug 02 | Europe
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