Thailand Floods Could Cause
up to $11B in Insured Losses
BY MARK E. RUQUET AND PHIL GUSMAN
FLOODING IN Thailand that be- gan in July and peaked in Octo- ber and November could result
in insured losses of more than $10 billion, according to the latest estimates.
Swiss Re says industry losses could
come in between $8 billion and $11
billion. The global reinsurer put its
own losses at around $600 million.
Aon Benfield, a subsidiary of Aon
Corp., says industry losses could
exceed $10 billion, and adds that
economic losses could be as high as
Munich Re says it expects its share of
losses to be around €500 million ($666.1
million at current exchange rate) net
Additionally, in November Tokio Marine
Holdings announced that it had incurred
estimated net claims of $1.3 billion from the
event. Part of that figure includes a retained
share of reinsurance, placed with Lloyd’s
syndicate Tokio Marine Kiln Syndicate 1880.
Syndicate 1880’s share of the $1.3 billion loss
was recently estimated to be $700 million.
Based on the Swiss Re and Munich Re
estimates, Moody’s Investors Service says
it expects the event to “meaningfully
hit” the reinsurance industry’s fourth-quarter results.
Moody’s said in its Weekly Credit
Outlook that it expects the largest global
reinsurance players to report the highest
losses: “In addition to Swiss Re and Munich
Re, these players include Hannover Re,
Lloyd’s of London, SCOR, Berkshire
Hathaway and Partner Re.”
The floods are due to heavy rains
that began in July and fell heaviest
in October and November. Moody’s
says the floods have submerged
major industrial areas containing
factories belonging mostly to
Japanese companies, disrupting
the manufacture of electronic key
components. Thailand is also a
major producer of hard-disk drives
for computers around the world,
BY MARK E. RUQUET
PROPERTY-AND-CASUALTY insur- ance brokers were given a contin- ued “stable” outlook from Fitch
Ratings, as revenue and earnings growth
in 2012 is forecast to match or exceed
levels recorded during the first nine
months of 2011.
In a five-page report reviewing five
publicly traded national insurance-brokerage firms, Fitch says that despite
premium gains aiding top-line growth,
brokers’ revenues are expected to be
“modest due to a flat rate environment” in
the commercial-insurance market.
In the rating service’s review of
insurance brokers Aon, Arthur J. Gallagher
(AJG), Brown & Brown, Marsh & McLennan
(MMC) and Willis, average operating
income increased for the group to just over
$600 million in the first nine months of
2011—from slightly less than $600 million
during the same period in 2010.
The increase, Fitch says, was primarily
on the strength of higher earnings at
MMC and at Aon from its acquisition of
Willis’ results were negatively affected
by debt-repurchase expenses and its
2011 operational review, which led to a
$130 million charge.
For AJG and Brown & Brown, operating
income was essentially unchanged.
Acquisition activity increased, Fitch
says, with the number of transactions
through October 2011 equaling all of 2010
and surpassing all of 2009.
“Fitch expects overall revenue growth
to continue to be driven by mergers and
acquisitions, as a ready supply of smaller
firms can provide a source of new revenue
for larger firms,” says Fitch.
A pending change in the capital-gains
tax rate for 2013 could compel agencies to
do more deals next year, Fitch adds. NU
December 19/26, 2011 | National Underwriter Property & Casualty | 7