Munich Re, the world’s largest reinsurer, said storms led by Hurricanes Harvey and Irma will probably wipe out third-quarter profit and threaten the company’s ability to meet its full-year earnings target.
“These two events are expected to result in high insured losses, which the market and Munich Re are unable to quantify at the moment,” the company said Wednesday in a statement.
The storms in North America add to challenges for new Chief Executive Officer Joachim Wenning who is seeking to counter years of falling profit as the company was pressured by low interest rates and competition from Wall Street firms in taking on weather-related risks. The company had previously given guidance of 2017 profit of 2 billion euros ($2.4 billion) to 2.4 billion euros.
“Despite good business performance in 2017 to date, the losses from Harvey and Irma could mean that Munich Re might miss its profit guidance,” for the year, the company said.
Primary insurers such as Hartford Financial Services Group Inc. and Allstate Corp. have said it is too early to assess the damage from Irma, which struck Florida days ago. That’s partly because it’s been difficult to get staff into the state after flooding. Some insurers say their costs will be cushioned partly by risk-transfer deals with reinsurers.
Munich Re shares have dropped about 2 percent this year in Germany. The company’s American depositary receipts tumbled in New York after the announcement, falling to $20.32, or 3.9 percent less than Tuesday’s close.