Atlas Magazine July 2010

2010, the year of uncertainty

While some are preparing their summer holidays, with an eye on the World Cup, reinsurers have started to make their tolls . Even though Munich Re has exhibited a lot of optimism for 2010, doubt is setting in.

Following a first semester marked by large-scale natural catastrophes, the cyclonic season which is starting in the Gulf of Mexico does not seem to be any milder, either.

The profits made in 2009 and the adjustment of the investment portfolios has enabled large reinsurers to start the current year with a consolidated shareholder's equity. Unfortunately, many of these reinsurers have been affected by the events happening in the first months of 2010: earthquakes in Haiti and Chile , floods in Poland, and China, storms in Western Europe, hail in Australia.

In addition to these natural catastrophes, we need to consider the technological malfunctions caused by the economic development of these recent decades. The damages caused by the explosion of the oil rig Deepwater Horizon at 70 km off the American coasts could amount to tens of billions of dollars.

Finally, the European economic crisis, with its huge deficits and budget restrictions that ensued, stands as an additional obstacle that the market is required to face.

According to Standard & Poor's, many reinsurers may be weakened in 2010. We keep our fingers crossed.

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