HANNOVER, Germany, Sept. 6, 2004 (PRIMEZONE) -- Hannover, 6 September 2004: Having been hit hard only three weeks ago by Hurricane "Charley", the US state of Florida has now suffered a second severe windstorm in the form of Hurricane "Frances".
Reinsurers ought to expect windstorms (hurricanes in the Carribean, typhoons in East-Asia) especially in the third quarter - even though it is highly unusual for Florida to be hit by two hurricanes within such a short period of time. Wilhelm Zeller, Chairman of the Executive Board, already had indicated as much in August in a telephone conference with analysts, when pointing towards the upcoming hurricane season in his outlook on the second half of 2004. Hannover Re is therefore well prepared. Events like these are part of the daily business of a reinsurer. The only essential consideration here is, that a reinsurer has taken appropriate precautionary measures, i.e. its liabilities have been made transparent and it has limited its exposures along with having taken out suitable retrocession cover from reliable partners for its catastrophe exposure.
In the case of Hurricane "Charley" Hannover Re had initially anticipated a maximum loss burden of EUR 100 million in the immediate aftermath of the event. Having reviewed various data sources it has now become clear that for Hannover Re the scale of losses caused by this hurricane is far less serious than originally anticipated, and we are therefore able to revise our loss downwards. At this point in time we expect total net loss expenditure (before taxes) in the order of EUR 70 million.
Hurricane "Frances", which swept across the Bahamas on Friday and on Saturday hit extensive areas of Florida, is likely to result in a burden of losses in the mid-range double-digit million euros for Hannover Re's net account before taxes. In this case, too, our exposure is limited by our retrocession covers.
To the backdrop of these two major loss events and in light of a corresponding burden of around EUR 50 million from the first half-year, we have in our today's perspective no reason to change our profit forecast of EUR 390 to 430 million for the entire 2004 financial year. In our assessment, however, the latest hurricanes will favourably impact the treaty negotiations as at 1 January, 2005. The price erosion that many market players had anticipated in natural catastrophe reinsurance business is now unlikely to materialise.
Hannover Re, with gross premiums of approximately EUR 11 billion, is one of the five largest reinsurance groups in the world. It transacts all lines of property/casualty, life/health and financial/finite-risk reinsurance as well as program business. It maintains business relations with more than 3,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices in 18 countries. The rating agencies most relevant to the insurance industry have awarded Hannover Re very strong insurer financial strength ratings (Standard & Poor's AA- "Very Strong" and A.M. Best A "Excellent").