Friday, November 18, 2011

Insurers Could Lose $10 Billion from Thai Floods: Berkley

By Andrew Bary

The recent flooding in Thailand could result in over $10 billion of losses for the global insurance industry, according to William Berkley, the chief executive of W.R. Berkley (WRB), a Greenwich CT-based property and casualty insurer.

Speaking at a Manhattan lunch, Berkley said the Thai losses could run as high as $25 billion. One affected company, Western Digital (WDC), a maker of disk drives with significant production in Thailand, said last month that 14,000 factories in Thailand have been flooded or damaged.

Berkley said insurers probably will pay significant claims for business interruption insurance. Its very difficult to get a flooded plant operational, he said, adding that the Thai insurance losses would be big numbers.

It has been a tough year for insurers when it comes to natural disasters, with numerous major catastrophes including the Japanese earthquake and Midwestern storms in the spring.

Berkley also reiterated his view that pricing is turning higher in the P&C sector and the trend should continue into 2012. Berkley noted in its third-quarter profit release that its average premium increase in the quarter was 3% and Berkley said today that pricing could be up 5% to 8% at year-end from late 2010. He said the P&C industry needs higher pricing to offset low interest rates and weak results from underwriting in recent years.

Berkley shares are up 7 cents at $34.71 today and have risen 27% this year, pacing a strong P&C sector as investors bet that favorable pricing trends will continue and lead to better financial results starting next year.

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