Some of the world’s biggest reinsurers are bracing for potential losses running into tens of millions of euros after last week’s explosion that ravaged much of downtown Beirut.
Property damage alone from the blast, which killed at least 171 people and triggered the collapse of Lebanon’s government, could exceed $7 billion, according to the Institute of International Finance. Although only a fraction of the losses are covered by insurance, the blast’s financial impact still could blow holes in reinsurers’ balance sheets. Insured losses at the port and nearby vessels and cargoes could reach $250 million, according to Guy Carpenter & Co., a U.S. brokerage.
“We are currently assuming that this will be a major loss for us,” Christoph Jurecka, Munich Re’s chief financial officer, told reporters in an Aug. 6 conference call. He declined to estimate the size of the loss, but Munich Re classifies total payouts of more than 10 million euros ($11.8 million) for one incident as “major.”
Hannover Re, another Germany-based reinsurer, also anticipates a loss of at least 10 million euros, a company board member, Sven Althoff, said last week in a call with analysts.
The Lebanese cabinet’s resignation on Monday prolongs uncertainty about the size and timing of any eventual payouts. The government was still investigating the cause of the Aug. 4 explosion when its members quit. The judiciary plans to question finance and public-works ministers in office since 2013, when a stockpile of ammonium nitrate that caused the blast was first unloaded at the port.
An official conclusion that blames terrorists would nullify many of the claims, but for now, insurers, reinsurers and property owners alike are in limbo.........MUCH MORE
As one Lebanese gentleman said off the record, "I think we all know why that explosive material wasn't disposed of for all those years."
