Swiss Reinsurance Co., the world's second-largest reinsurance company, on Monday doubled to $40 billion its estimate of claims the global insurance industry will face from Hurricane Katrina, making it the world's costliest hurricane.
Swiss Re, which previously agreed with world's largest reinsurer Munich Re that the total losses would be $20 billion, said it increased loss estimates because the damage caused by the hurricane was bigger than thought.
"Due to the unique nature of the event, the complexity and the magnitude of destruction caused, accurate claims estimates remain difficult," the company said.
Swiss Re also more than doubled to $1.2 billion the estimate of the claims the company itself may face, which means it is unlikely to meet its profit growth target of 10 percent earnings per share this year.
The company said it will use its reserves to cushion the impact of the hurricane.
The revised estimate would make Katrina the most costly hurricane, ahead of Andrew in 1992, when claims reached $22 billion with figures adjusted to current dollar values, according to Swiss Re figures.
"Swiss Re's financial strength remains very strong and is expected to grow further in the second half of the year," the company said. It confirmed it plans to pay a dividend of 2.50 Swiss francs ($2.01) per share for 2005.
Chief Executive John Coomber said the higher frequency of natural disasters would force up prices in upcoming renewals.