European windstorm claims cold top $3B, put pressure on German property rates

The Twin Windmill in Greetsiel, Germany, was destroyed b Windstorm Christian last month./ AP PHOTO

The fierce windstorm that hit parts of northern Europe, the worst to strike the region in three years, may result in insured losses as high as €2.3 billion ($3.07 billion).

The Oct. 27-29 storm, known widely as Christian but with several names depending on the country, caused widespread damage in Belgium, Denmark, Estonia, Finland, France, Germany, Latvia, Luxembourg, the Netherlands, Sweden and the United Kingdom.

The storm will particularly pressure rates for catastrophe-exposed property in Germany, where losses already mounted from storms earlier this year. The storm is expected to be the costliest in Europe since windstorm Xynthia in 2010, according to Aon Benfield. That storm caused insured losses of €1.32 billion ($1.76 billion), according to Perils A.G., excluding losses covered by the French government-backed natural catastrophe pool.

Christian packed hurricane-force winds, with gusts of up to 120 mph recorded in Denmark, and torrential rain, resulting in at least 18 deaths and 1.2 million left without power across Europe, according to Impact Forecasting, the catastrophe modeling unit of Aon Benfield in London.

“Windstorm Christian serves as a reminder of the peak-zone status for this peril in Europe and the need to constantly understand its risk,” said Adam Podlaha, head of Impact Forecasting in London.

The storm came early, as European windstorms typically occur during the winter months, experts said.

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While many of the countries hit by Windstorm Christian also were hit by Windstorm Kyrill in 2007, insured losses likely will be less than the roughly €3.5 billion ($4.68 billion) in insured losses from Kyrill, Oakland, Calif.-based catastrophe modeler Eqecat Inc. said.

Boston-based catastrophe modeler AIR Worldwide Corp. estimated insured losses would range from €1.5 billion to €2.3 billion ($2 billion to $3.07 billion), with the majority in Denmark and Germany.

Willis Re, a unit of London-based Willis Group Holdings P.L.C., estimated insured losses at €800 million to €1.3 billion ($1.07 billion to $1.74 billion), with between €250 million and €400 million ($334.2 million and $534.8 million) of the total in Germany.

London-based multiline insurer RSA Insurance Group P.L.C. said it expected the storm to cost it £45 million to £65 million ($72.1 million to $104.2 million), with the majority affecting its Baltic and Scandinavian units.

Martyn Street, a director at Fitch Ratings Ltd. in London, said losses from the storm should be “manageable” for most U.K. insurers.

Swiss Re Ltd. said the storm could result in its losses totaling about €100 million ($133.7 million).

Hannover Re S.E. Chief Financial Officer Roland Vogel said he expected the storm to cost the reinsurer €10 million to €50 million ($13.4 million to $68.5 million).

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But 2013 already has been the costliest year ever for insured natural catastrophe losses in Germany, said Hannover Re CEO Ulrich Wallin, which he said is expected to result in pressure to increase rates at the Jan. 1, 2014, renewals.

Torsten Jeworrek, CEO of reinsurance at Munich Reinsurance Co., said while reinsurance rates are generally expected to be stable for the 2014 renewals, “special circumstances apply to the German market, where the high number of losses from natural hazard events in the current year will play an important role in the renewal negotiations.”

While losses from the windstorms likely will fall within the catastrophe budgets of most European insurers, companies that write a large proportion of German property business may see losses exceed those budgets, according to A.M. Best Co. Inc.

Depending on their level of reinsurance protection, some German property insurers may post an underwriting loss as a result of the storm and other natural catastrophes this year, Best said.

“Considering the extent to which the German property and motor classes have been hit this year, A. M. Best would expect local insurers to attempt to re-coup some of these losses through rate increases in 2014,” Best said in the analysis.