Even as tristate area companies checked on colleagues in Japan and opened their pocketbooks to donate, uncertainty prevailed as to the extent the Tohoku earthquake would impact their businesses.
Concerns over insurance premiums and the ability to buy or sell goods in Japan in the short run were coupled with worries about broader macroeconomic factors such as interest rates.
The area is home to the U.S. headquarters of Swiss Re America Holding Corp. and multiple other reinsurance carriers expected to take a major hit to their bottom line. There are also a number of local multinational corporations with significant business operations in Japan, including Armonk-based IBM Corp. and General Electric Co. and Xerox Corp., both based in Fairfield County, Conn.
Also in Fairfield County are the base operations of AmeriCares and Save the Children, which had teams in Japan soon after the disaster struck to coordinate international relief efforts, as well as Sikorsky Aircraft Corp., whose helicopters were pressed into service to rescue survivors and ferry supplies in the tsunami zone.
With the death toll an unknown at deadline, early estimates by Boston-based AIR Worldwide Corp. pegged the earthquake”™s monetary damage between $15 billion and $35 billion. That figure does not include destruction from the ensuing tsunami, with AIR estimating another $24 billion in property was within a few miles of the coast and so prone to tsunami damage.
Eqecat Inc., an Oakland, Calif.-based company that sells economic modeling software, estimated total economic damage caused by the quake would exceed $100 billion, which would put it into the sphere of Hurricane Katrina ”“ estimates of that storm”™s damage range between $100 billion and $150 billion.
In an analysis of the impact of the quake and tsunami on reinsurance carriers, Moody”™s Inc. cited Swiss Re, Berkshire Hathaway Inc. and PartnerRe Ltd. among carriers that could be most affected, as well as Everest Re Group Ltd. in Liberty Corner, N.J. Berkshire Hathaway owns General Reinsurance Corp., which has some 800 employees in Stamford where Gen Re is based.
On March 14, Swiss Re”™s Zurich headquarters issued a formal statement that it remains committed to Japan”™s insurance market and supporting the recovery, while saying it would need more time to evaluate its total exposure to potential claims.
The company stated the circumstances in Japan are complex due to what risks are covered by the private insurance market ”“ including commercial damage from tsunami ”“ and those covered by Japan”™s government, including residential tsunami damage.
Swiss Re added that coverage for nuclear facilities in Japan excludes earthquake shock and tsunami, both in terms of physical damage and liability, and coverage for property policies excludes nuclear contamination.
Overall, there is unlikely to be a significant impact on the property and casualty insurance industry as a result of the nuclear accident, the company stated.
“Swiss Re Group remains wholly committed to continuing to provide capacity to the Japanese market and maintaining our strong relationships with clients,” stated Stefan Lippe, CEO of Swiss Re. “Our role is to support the Japanese people in quickly recovering from this unprecedented and tragic event.”
The day before the disaster, Swiss Re had estimated its losses from the latest New Zealand earthquake at $800 million; insurance claims from the event could hit $12 billion.
At deadline, Gen Re and Berkshire Hathaway had yet to make any formal statement on any exposure to claims stemming from the disaster.
Gen Re and its sister Berkshire Hathaway reinsurance group (also based in Stamford) combined for a $628 million gain from underwriting in 2010, down from $727 million in 2009 and nearly $1.6 billion in 2008. Included in those results was $647 million in net catastrophic losses from earthquakes in Chile and New Zealand, the BP oil spill in the Gulf of Mexico, storms and flooding in Australia.
On a net basis at year-end, the two units combined for a total unpaid liability of $40.1 billion in 2010, up from $39.3 billion in 2009, though Gen Re”™s property losses were lower in 2010.
Net premiums earned for Gen Re totaled nearly $5.7 billion, about $3 billion from property and casualty policies and the remainder for life and health policies.
Bermuda-based PartnersRe has its U.S. headquarters in Greenwich, Conn., which is also home to the reinsurance carrier W.R. Berkley Corp.
