Insurance stocks up after Irene pulls punch

FRANKFURT: European insurance stocks rose in relief on Monday after Hurricane Irene appeared to pack less of a punch than initially feared when it struck the United States over the weekend.

The world's top three reinsures, Munich Re, Swiss Re and Hannover Re, saw their shares rise more than 3 percent, while the broader the STOXX Europe 600 insurance index rose 1.4 percent.

Hurricane Irene was downgraded to a tropical storm on Sunday but still affected large areas of the US East Coast, including New York City and New England.

Insurance players were cautious about potential losses as data from claims assessors begins to filter through.

"There is flooding and power outages. It is too early to estimate the damage," a Munich Re spokeswoman said.

Modelling agency AIR Worldwide had on Sunday pencilled in insured losses of between $2 billion and $8 billion, while industry observers saw a loss of about $3 billion for the US mainland, and a further $500 million for North Carolina alone.

"Irene will add to natural catastrophe claims expenses at reinsurers but does not require us to change our full-year 2011 estimates," said Silvia Quandt analyst Christian Muschick in a note to clients.

Reinsurers had already been hit hard by damage claims from earthquakes in Japan and New Zealand earlier this year and analysts have predicted that any big claims from hurricanes could force the industry to raise insurance prices.

"Irene was not as dramatic as expected and will keep pressure up on natural catastrophe pricing," said Vontobel analyst Stefan Schuermann, who forecast a charge of about $100 million for Swiss Re.

While the North Atlantic hurricane season tends to peak in August and September, it runs to the end of November, so there is plenty of time left for damage from storms that have yet to form.

"The game is not over yet," said Silvia Quandt's Muschick.

Copyright Reuters, 2011