LONDON (AP) — Shares in some of the world's biggest reinsurance companies took a pounding Friday on fears that the earthquake in Japan and the subsequent tsunami will cost them dearly.
By early afternoon Friday, they were leading many of Europe's major stock indexes lower. Among the major fallers were Swiss Re and Munich Re, which were both trading around 6 percent lower. Hannover Re was also down around 5 percent.
The companies issue backup insurance to primary insurers so that the system can cover large losses from disasters. Hannover Re already said last week it expected to pay out euro150 million ($207 million) for the earthquake that hit New Zealand.
The impact on the companies depends on many factors, such as how much of the damage was insured by them and how much they charged for coverage.
It wasn't just reinsurers taking a knock, though. Primary insurers saw their shares slide, with Allianz and Prudential down 2 percent.
“It's pretty early days to establish any early figures but clearly when these events take place, the initial response is to knock the insurers,” said Jeremy Batstone-Carr, director of private client research at Charles Stanley stockbrokers in London.
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