Swiss Reinsurance Co. (SSREY.PK, SWCEF.PK) on Tuesday estimated its claims costs from Thailand's severe flooding at $600 million. The estimates, net of retrocession and before tax, remains subject to significant uncertainty, as it is difficult to assess losses accurately due to the still higher water levels following intense rainfall, the Swiss reinsurer added. The company currently estimates the total insured market loss to be in the range of $8 billion to $11 billion.
Since July, the country has experienced very strong monsoon rainfalls, exacerbated by the remnants of three typhoons - Nok-Ten, Nesat and Nalgae. From July to October this year, northern and central Thailand experienced their highest rainfall in 50 years, which caused more than 600 hundred deaths and flooded approximately 1500 industrial facilities. Millions of tons of food crops have been destroyed.
Swiss Re noted that the industrial facilities affected consist mainly of factories belonging to and supplying Japanese companies, and to a lesser extent Western-based international companies.
Thailand is an important export hub for industries such as automotive and electronics. The country is a significant link in the global manufacturing industry supply chain and is the world's second-largest producer of hard disk drives for computers. According to Thai Office of Insurance Commission, total insured exposure in these industrial estates is estimated at $20 billion.
Swiss Re's Chief Underwriting Officer Brian Gray, said, "In addition to the human cost, the impact of this flood on the Thai economy and the companies that operate there is likely to be significant and could last some time. The floods have forced the closure of several major industrial estates. For weeks, factories were under several metres of water and have been unable to produce and supply key parts to global carmakers or digital and electrical goods manufacturers."
The company noted that water levels are now receding, but remain high in some areas, delaying resumption of operations. It also slows access to the sites by claims adjusters, which would cause significant uncertainty in estimates for property damage and business interruption claims for some time.
Extending help towards the industries affected by the flooding, the Thai Government recently announced that it will waive import duties on machinery and parts. The government also agreed to allow Honda Motors Co., Ltd. (HMC) to import finished autos at zero tariff to make up for supply shortfalls.
In Zurich, Swiss Re shares settled at 49.69 Swiss francs, up 0.31 francs or 0.62 percent.
In the U.S., the company's shares closed Monday's trading at $53.92, up $0.82 or 1.54 percent.
by RTT Staff Writer
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