Swiss Re announced today it will not meet earnings estimates in the face of its projections that the insurance industry's total insured loss from Hurricane Katrina will be about $40 billion and its own claims will hit $1.2 billion.
As a result the company will have to raise its prices, announced Swiss Re Chief Executive Officer John Coomber.
The Zurich-based reinsurer had previously projected an estimated market loss of $20 billion with Swiss Re's Katrina claims at $500 million.
Swiss Re said with the increased loss to the marketplace it expects its own claims to be in the range of $1.2 billion before tax.
The company noted that due to the unique nature of the event, the complexity and the magnitude of destruction caused, accurate claims estimates remain difficult.
While the company's target of 10 percent earnings per share growth will likely not be met for this year, Swiss Re said it does expect to use part of its equalization reserves, built to help mitigate large claim events such as Katrina.
Swiss Re said its financial strength remains very strong and is expected to grow further in the second half of the year.
The company said its board affirmed the recommendation of a dividend of 2.50 Swiss francs ($1.98) per share for the business year 2005, assuming normal business development for the remainder of the year.
Mr. Coomber, Swiss Re CEO, said in a statement that, "We are witnessing increasing natural catastrophe events across the globe, effecting economies and societies with a higher frequency and severity. Price levels in the upcoming renewals must be adjusted to reflect these developments."
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