Friday, February 12, 2010

Munich Re - Hazard Insurance

In my sabbatical city of Munich lies the headquarters of Munich Re. According to Wikipedia, Munich Re (Munich Reinsurance Company), a is the world’s largest reinsurer. In 2008 the company's equity amounted to $30 billion. The group’s premium income for the year (gross premiums written) was $6 billion, with its consolidated profit amounting to $2 billion. Big business!  One of the main offices is down the street from my apartment, and the commanding presence of the 50-foot tall Walking Man, by the American artist Jonathan Borofsky, is right out front on Leopoldstrasse.

Munich Re has some very good web pages on natural disasters.  It states its interest in earthquakes:

"Underwriting aspects - There are many areas with high concentrations of values and population that are also located in zones of very high seismic activity. In highly exposed areas with, at the same time, a high concentration of values and high insurance penetration, the insurance industry is confronted with a major problem: the possible accumulation of losses which include the risk of financial ruin. This makes it all the more important to gain an objective impression of the exposure. Only with this as a basis can the most appropriate prevention measures be implemented, be they realistic premium calculations, accumulation controls, and the establishment of reserves, or structural improvements and land-use restrictions."

Here is a table from Munich Re on the costliest hazards in recent years (pre-Haiti):

Yes, that's $125 billion for Katrina!  No wonder insurers are interested in natural disasters.

More from Munich Re to come.

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