China Reinsurance, the country’s biggest reinsurer, has estimated that it could suffer losses ranging up to CNY1,100 million (US$174 million) from the 12 August explosions in Tianjin Port which has caused one of the biggest man-made losses to date in Asia.
The company, which went public in October, disclosed this in its prospectus, saying: “We expect that our aggregate pre-tax losses arising from the 2015 Tianjin Explosions, net of estimated recoveries from reinsurance and retrocession (including excess of loss coverage) and estimated sliding scale commission adjustments, could range from approximately CNY900 million to approximately CNY1,100 million.
These estimated losses are primarily attributable to China Re’s commercial property and cargo lines of business in its P&C reinsurance segment and the commercial property, cargo and motor lines of business in its primary P&C insurance segment.
Likely to have an adverse impact on China Re’s 2015 profit
The company said that taking into account the size and nature of its operations and its financial strength, the estimated aggregate losses arising from the Tianjin explosions will have an adverse impact on its net profit for 2015, but it does not anticipate that these losses will have a material adverse effect on its overall business or financial condition.
However, it added: “Estimating losses following any major catastrophe is inherently uncertain and made more challenging in this case by a number of factors, including, among others, the ongoing investigation and damage assessment by governmental authorities, insurers and reinsurers, current restrictions on accessing portions of the affected area and delays in claims reporting. While we believe that our preliminary estimates are reasonably made under the current circumstances, we cannot assure you that the amount of our actual losses in connection with the 2015 Tianjin Explosions will be within the range of our current estimates.”
Estimates given for other insurers include:
The International Union of Marine Insurance (IUMI) has said that cargo losses of up to US$6 billion are expected from the blasts. The impact of dangerous chemicals would “add to the final loss figure”.
Reinsurance broker Guy Carpenter has said that insured losses from the blasts could be as much as $3.3 billion, based on satellite images of how buildings, cargo, containers and property around the port were hit. However, its estimates do not include clean-up or contamination costs.
The explosions killed more than 170 people and injured more than 800.