Munich Re updates loss estimate for Hurricane Katrina

Munich Re updates loss estimate for Hurricane Katrina: Possible loss burden for the Group of around EUR 1.1bn gross or approximately EUR 500m after retrocessions and taxes / First estimate for Hurricane Rita.

As the full extent of the devastation caused by Hurricane Rita has gradually emerged and Munich Re experts have concluded and evaluated their loss inspection of the hurricane-affected region, the Company is now revising its original estimate on the scale of losses. Munich Re currently estimates the overall market loss at up to USD 30bn. This figure does not include the flood and storm-surge losses covered under the National Flood Insurance Program (NFIP). However, there are still significant uncertainties regarding the loss burden for the insurance industry, not least due to highly complex questions regarding the actual extent to which losses are covered by insurance. It therefore cannot be ruled out that the insured market loss could exceed USD 30bn.

On the basis of a market-loss scenario of up to USD 30bn, the loss burden for the Munich Re Group could be in the region of EUR 1.1bn gross or around EUR 500m after retrocessions and taxes. A higher insured market loss in the region of USD 60bn could produce a gross loss burden of around EUR 1.3bn and a net burden (after retrocessions and taxes) of a just under EUR 650m.

Katrina was followed by Rita, another severe hurricane on the US Gulf Coast. According to initial calculations based on an assumed market loss of USD 5bn to 10bn, the loss burden for the Munich Re Group could be around EUR 230m gross and around EUR 150m after retrocessions and taxes.

This year's natural hazard events have thus already clearly exceeded the loss forecasts for the first nine months of the year. The Board of Management is nevertheless optimistic of achieving the result target of 12% return on equity if the acquisition of HVB by UniCredit is completed in 2005. As always, this statement is subject to the proviso that in the remaining three months of the business year there are no exceptional developments with regard to major losses or on the capital market.