Japan and Canada events to affect catastrophe budgets

With $3bn and $4.8bn of estimated loss respectively, the April Japanese earthquakes and the current wildfire affecting the Alberta region in Canada combined are expected to  exceed the catastrophe budgets of major reinsurance firms.  

Explaining the impact of both catastrophes, analysts at J.P. Morgan Cazenove concluded that “Munich, SwissRe and SCOR may have a potential impact equivalent to 8-11% of 2Q16 net profit”, and added that these impacts “could be significant in terms of eroding some of the capital buffer available to cover any U.S. hurricane losses in the third-quarter of the year”. 

According to these numbers, Swiss Re could face as much as a $468m loss from the quakes and wildfire, Munich Re $410m, Hannover $205m and SCOR $103m. 

On commenting on the Canada wildfire, which is expected to be the most costly natural disaster event in the history of the country, analysts pointed out that retrocession and the ILS market are also likely to come into play.