German insurers declined in Frankfurt
trading on concern some of the country’s worst floods in more
than 50 years will erode earnings.
Munich Re, the world’s biggest reinsurer, slid as much as
3.9 percent to 139.01 euros, the lowest intraday price since
March 5. The stock fell 2.6 percent as of 11:57 a.m. Smaller
competitor Hannover Re (HNR1) was down 2.9 percent, while Allianz SE (ALV),
Europe’s biggest insurer, retreated 1.5 percent.
Floods, which wreaked havoc across central Europe at the
weekend, worsened in eastern and southern parts of Germany today
as vast areas of the historic center of Passau, where the
Danube, Inn and Ilz rivers converge, lay under water. Soldiers
were deployed to assist citizens in the states of Saxony,
Thuringia and Bavaria. The deluge recalled images of flooding in
2002, which ruined harvests, prompted mass evacuations, and
damaged buildings, including the 19th century Semper Opera in
Dresden.
“There’ll be some losses, but they’re unlikely to be out-sized,” Ben Cohen, an analyst at Canaccord Genuity Corp. in
London, said today by phone. “The caveat is that it’s still
early days and the weather could change and the rainfall could
increase.”
Cohen recommends investors buy shares in Allianz and Munich
Re (MUV2) and has a hold stance on Hannover Re.
Soldiers Deployed
Almost twice as much rainfall as usual last month made it
the second-wettest May since records began in 1881, according to
Deutscher Wetterdienst, Germany’s national meteorological
service.
Water levels of the Danube exceeded the 12.2 meters (40
feet) measured in 1954, and are expected to reach peak levels of
12.5 meters around midday, Stefan Zoller, a spokesman for the
Bavarian state environment ministry, said.
DWD forecast further heavy rainfall between the eastern
state of Saxony and the Bavarian Alps in the south in the course
of the day.
Insurance claims for 2002 floods in central and eastern
Europe totaled $3 billion, according to Munich Re.
Losses for the insurance industry will probably be lower
than during previous record floods as municipalities have
improved their protection and the waters are affecting rural
areas more than cities, said Cohen.
Bavaria has spent 1.6 billion euros ($2.1 billion) on flood
protection since 1999 and is investing a total 3 billion euros
by 2023, according to the Environment Ministry.
“There’s a better level of understanding after the 2002
floods in Germany,” said Cohen. “People are better prepared.”
To contact the reporter on this story:
Nicholas Comfort in Frankfurt at
ncomfort1@bloomberg.net
To contact the editor responsible for this story:
Frank Connelly at
fconnelly@bloomberg.net