Tianjin loss estimates are conservative: PartnerRe
The Tianjin explosion is likely to be much more costly than has so far been predicted, according to one reinsurer carrying exposure to the loss.
PartnerRe expects the figure to rise significantly from the figure of $1 to $3 billion that has been widely reported for the loss from the fierce fire that raged around the Chinese chemical storage facility back in August.
Greg Haft, head of catastrophe at PartnerRe, told PCI Today: “I have seen estimates that it will grow to be a loss of up to $3 billion dollars; I think it’s going to be a good bit higher than that.”
He was speaking days after the global multi-line re/insurer reported that it faced a pre-tax hit of up to $70 million (net of retrocession and reinstatement premiums) flowing the China catastrophe, which will be recorded in the company’s third quarter 2015 results in its global P&C, specialty, catastrophe and North America sub-segments.
The XL Group said earlier this week that its preliminary estimated losses related to Tianjin were approximately $100 million, of which approximately 30 percent can be attributable to the insurance segment and 70 percent to the reinsurance segment.
It’s a hugely complex loss—and could grow to become the largest manmade loss in history in Asia.
“China is looking like a major event and it’s a challenging one for which to make an accurate loss estimate, as you are moving from one line of business to another. It’s also difficult for the Chinese authorities,” Haft said.
He added that the event would help to harden catastrophe rates in China; the north east US would also see a strengthening in pricing.
“We will see different rate changes in different places around the world,” Haft said, adding “we are not at rock bottom yet” with regard to the enduring soft reinsurance market, although he did foresee only mid-single reductions in property/catastrophe reinsurance.
He viewed as encouraging the fact that enquiries regarding US windstorm coverage seems to be occurring earlier each year.
“That seems to be a trend,” said Haft. “We are getting submissions and data earlier year-on-year. I think several brokers are advising clients that pricing may be firming up as we approach year-end.”
He is bullish about the continued influx of third party capital into the reinsurance space.
“We view reinsurance as a bridge to alternative capital for our clients. It is up to us to know the risk and we think that it is important for investors to understand the risk they are taking. We believe in bringing our partners into this space but also of the need to be fully transparent.”
