Reinsurer Munich Re AG estimated Tuesday that it will have to pay out some euro1.5 billion ($2.1 billion) for claims resulting from Japan's devastating earthquake and tsunami, and dropped its 2011 earnings target.
Munich Re said its estimate was based solely on models because it will be "many weeks" before the losses are assessed and all the claims notifications arrive from primary insurers in Japan.
However, it says its profit target of around euro2.4 billion for this year, issued in February, "can no longer be maintained" in light of a first quarter that already has seen high losses from New Zealand's earthquake and flooding in Australia.
Projected losses from major natural disasters for the period now amount to more than euro2.5 billion, "far exceeding the volume to be expected," Munich Re said. It did not provide a new full-year earnings target.
Reinsurers issue backup insurance to primary insurers so that the system can cover large losses from disasters.
Munich Re's losses from the Japanese earthquake result mainly from coverage of commercial business because quake insurance for the country's residential buildings is provided almost entirely by the state-insured Japanese earthquake pool, the company said.
"The private insurance industry will not be significantly affected by the accidents at the Fukushima nuclear power plant," it added in a statement.
Munich Re said that uncertainties over the level of reinsurers' exposure to the earthquake include "the impact on international flows of goods and supply chains from business interruptions suffered by Japanese industrial producers."