Swiss Re expects insured storm losses in Scandinavia to double by the end of the century
28 August 2007, Zurich
Stockholm, Swiss Re, the world's largest reinsurer and leading risk manager, will today warn delegates at a leading industry conference about the long term consequences of climate change for the Nordic region. At its second Nordic Risk & Insurance Summit (NORIS), Swiss Re will show how winter storms Anatol, Gudrun and Per are harbingers of a more stormy future in Scandinavia, leading to a doubling of insurance claims due to natural catastrophes by the end of this century. The company's experts will also discuss with participants how alternative forms of risk transfer, such as catastrophe bonds, can be used to manage the financial consequences of a changing climate.
As a leading expert in climate change, Swiss Re has studied the predicted development of winter storms in Europe and has quantified how this will impact insured losses from natural catastrophe events. According to this research, climate change is set to trigger more frequent, and more intense winter storms in the Nordic countries, causing increasing levels of damage in the longer term.
Currently, Swiss Re expects an annual burden from winter storms in Europe of about EUR 2.6 billion for the insurance industry. Assuming a normal, linear progression this figure could increase each year by around EUR 11 million. Based on a typical year's expected claims experience, this could mean a doubling of insured storm losses in Scandinavia between now and the end of this century.
Ulrich Ebel, one of Swiss Re's leading storm specialists, will tell delegates: "While, as members of the wider general public, we can all play a part in limiting the impact of climate change, the (re)insurance industry itself is well prepared to help society and business address its impact."
Swiss Re's own commitment to tackling the financial consequences of climate change goes well beyond offering traditional property insurance. The company continues to develop alternative forms of risk transfer, such as catastrophe bonds. These instruments are a key example of insurance-linked securities (ILS), which are an innovative method of transferring risks to capital markets to create capacity for major risks such as storms. Investor appetite for ILS has shown a strong increase in recent years, with Swiss Re firmly among the leaders in developing this market: in 2007 Swiss Re Capital Markets has so far placed USD 2.3 billion out of total of approximately USD 5.7 billion worth of non-life issuance.
"The insurance-linked securities market is likely to continue to grow rapidly over the coming years. Swiss Re aims to maintain its leading position as structurer and underwriter, due to its focus on insurance risk and given its unique combination of understanding insurance risk, risk taking appetite and profound knowledge of the insurance investors in the capital markets," Luca Albertini, Managing Director of Swiss Re's Capital Management and Advisory will tell delegates.
Notes to editors
Swiss Re is the world's leading and most diversified global reinsurer. The company operates through offices in more than 25 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company's traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated "AA-" by Standard, Poor's, "Aa2" by Moody's and "A+" by A.M. Best.
Swiss Re in the Nordic markets
Swiss Re is a leading reinsurer in the Nordic insurance markets, with premiums written of above 220 EUR million annual premium in 2006. The company intends to continue growing its presence in these markets.
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