Financial losses derived from California forest fires earlier this year have increased to at least $ 3.5 billion for European insurance giants, according to CNBC calculations. The losses insured, mainly due to reinsurance claims, are in charge of 10 large companies listed in Europe, mainly focused on Germany, the United Kingdom, Switzerland and France. Munich Re and Hannover Re, which is quoted in Germany, two of the largest reinsurance firms, together they reserved almost $ 2 billion in losses. Swiss Re and Zurich companies collectively reported $ 830 million in visits. The companies that quote in London Hiscox, Lancashire Insurance, Conduit Re and Beazley reported losses worth almost $ 500 million. French and Ax French companies also reported losses of $ 167 million and $ 100 million, respectively. The total blow far exceeds the billions of expected dollars of analysts after forest fires. While the total economic loss was expected due to the disaster out of around $ 50 billion, JPMorgan analysts expected insured losses of around $ 20 billion. Berenberg analyst Michael Huttner told CNBC that the losses were much larger than expected in most insurance firms because forest fires were a “combination of unusual and large.” The non -contained nature of forest fire was a factor that led to great losses, he said. However, the analyst added that the profits generated by the companies far exceeded expectations and pointed out the resistance of the sector in the midst of great natural disasters. At the end of April, Swiss Re further increased the estimation of losses insured to $ 40 billion of Los Angeles fires, which makes it one of the most mortal and expensive disasters for California. The death toll from forest fires that devastated the Los Angeles metropolitan area, covering Eaton and Palisades, rose to 30 after human remains among carbonized houses. Millions have been displaced and thousands of houses and buildings have been destroyed. The CNBC account would leave European companies in the hook for almost a tenth of the total losses insured. Reinsurance companies offer policies to primary insurance suppliers, such as Chubb, which are present in California and deal directly with customers in the field. Reinsurance policies usually only enter after the primary insurance supplier absorbs approximately 400 million euros of losses. Out of Europe, Japanese reinsurers Tokyo Marine and Sompo revealed almost 50 billion yen ($ 348 million) in losses, significantly higher than the $ 63 million estimated by JPMorgan analysts in the days after the fire. If the Swiss Re forecast for total insured losses is concretized, the Los Angeles forest fire would be four times more devastating than the forest fires of the past. In 2018, forest fires in California cost the entire industry around $ 16 billion in losses. During that event, Munich Re absorbed most of the loss at 500 million euros. The experience of that disaster and others has led to deductible for events (or excess) to increase from 100 million euros to 400 million euros today. Losses for insurers, both in the United States and in Europe, have also been partly reduced by the introduction of the Just Plan, a grouped fund built with contributions from multiple insurance suppliers in California. The system is expected to first absorb most of the losses before private insurance companies begin to pay.
Insurance signatures such as Munich Re, Swiss Re receive $ 3.5 billion
