National Underwriter - December 19, 2011

A Disastrous 2011 Sees Epic
Tornadoes, earthquakes, wildfires and other catastrophes devastate the financ

E NO MATTER WHICH of the many varying estimates of total economic loss that you accept—such as $200 billion from Goldman Sachs or $309 billion from the Japanese government—the Japanese earthquake and tsunami is likely the costliest natural disaster of all time. But the loss’s epic scale did not turn a soft market hard because much of the cost of the catastrophe is being borne by the Japanese government, not private insurers and reinsurers.

IF ONE COULD use only a single word to sum up 2011, “catastrophes” best captures what this year was all about.

January started on a soggy note with large pockets of Australia under water, as floods caused insured losses of up to $3

billion. Just the next month, the Southern Hemisphere suffered again, as New Zealand saw a 6. 3 earthquake that toppled buildings in Christchurch and led to claims north of $10 billion

(part of a nightmarish, 12-month stretch where Kiwis experienced multiple quakes, including one in September of 2010 and another one in June of this year).

Then, for a few unforgettable
weeks in the late winter and
spring—from the massive Japanese
earthquake and devastating tsunami that
followed through the spate of tornadoes
that ravaged the U.S. in April and May—it
seemed like a major disaster struck every
other day.

SNAPSHOT: SECOND-QUARTER RESULTS
2Q11 NET
INCOME
(LOSS)
2Q11 CAT
LOSSES
2Q10 NET
INCOME
($364 million)
$419 million
$83.1 million
$91.9 million
TRAVELERS
CHUBB
W.R. BERKLEY
ARCH CAPITAL

Global reinsurer Munich Re counted 355 significant loss events in quarters one and two—which caused an all-time high of $265 billion in economic losses. In the U.S. alone, 100 events led to more than $18 billion in insured losses.

The second half, fortunately, did not see a Katrina-like event, but Mother Nature hardly let us off the hook. While Florida once again escaped the hurricane season unscathed, Irene underscored the degree of damage that can occur deep inland as it pounded, of all places, Vermont, and ultimately could lead to $4.3 billion of insured property losses.