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Munich Re, the world’s largest reinsurer by premiums, reported its latest quarterly results today, covering “the most loss-afflicted [quarter] in reinsurance history in terms of natural catastrophes,” according to chairman Nikolaus von Bomhard. The devastating earthquake and tsunami in Japan, in addition to another earthquake in New Zealand and widespread flooding in Australia, saddled Munich Re with €2.7bn in costs in the first quarter.

The impact of recent natural disasters on reinsurers is vividly illustrated by key players’ combined ratios—the ratio of losses and expenses to earned premiums. Munich Re reported a combined ratio of 159% in the first quarter, up from 96% in the previous quarter. Second-ranked reinsurer Swiss Re reported a similarly dire combined ratio of 164% in the first quarter.

Financially speaking, there is a silver lining to the recent losses: upward pressure on premium prices. Munich Re saw price increases of up to 50% on certain earthquake policies for April renewals, and predicts a “hardening effect” on a broader range of business lines during the July renewals. For its part, Swiss Re saw “strong” price increases in Japan and a “flattening” in prices in the US and Europe following decreases in January. With a series of severe tornadoes striking the US South and Midwest in April, and the Atlantic hurricane season approaching, further catastrophe losses could bring about a decisive turn in the pricing cycle sooner rather than later.

The scale of the human trauma as a result of the earthquake and tsunami that struck Japan on March 11th is terrible. By comparison, the economic costs of the disaster are modest. Still, estimates of the financial toll of the catastrophe are beginning to emerge.

Disaster modelling firm AIR Worldwide predicts that insured property losses will range between US$15bn and US$35bn. Any result in this range will dwarf the insured losses that stemmed from the last large quake in Japan, the 1995 Kobe temblor that cost the insurance industry US$3.5bn, according to Swiss Re.

Japan’s insurance industry is dominated by domestic firms, so they will take a large share of the losses—up to US$7.2bn, according to Moody’s. Shares of Japanese insurers plunged today, the first full trading session since the quake. Many commercial risks, however, are passed on to international reinsurers, who also face daunting costs. Following the series of natural disasters in Australia and New Zealand in recent months, the talk is now of a potential end to the long-running soft market. To the extent that a silver lining can be found amidst the tragedy, this could be positive for brokers.

The devastating earthquake in Christchurch, New Zealand yesterday was the latest, deadliest natural disaster to strike the region in recent months.

For insurers, losses as a result of the catastrophe are likely to be the largest since Hurricane Ike led to around US$20bn in insured losses in 2008. Early estimates suggest that the Christchurch quake may cost the insurance industry up to US$8bn. This follows an earthquake that struck near Christchurch less than six months ago and cost insurers US$3bn. Australia, meanwhile, was hit with two costly natural disasters earlier this year, as widespread flooding across Queensland caused an estimated US$2bn in insured losses in January, while Cyclone Yasi, which touched down in Queensland in early February, could cost the industry up to US$1.5bn.

Last year, global insured losses from natural disasters were around US$38bn, according to Aon Benfield. The toll from catastrophic events so far this year is already a significant share of 2010’s total and, as the chief executive of an Australian insurance group put it today, “horrible from a human perspective and a financial perspective”.

“Subject to normal catastrophe experience.” Only in a report about reinsurance could this appear as an ordinary disclaimer.

The latest outlook for the global reinsurance industry from Fitch is cautiously optimistic (the ratings agency upgraded the sector’s outlook from “negative” to “stable” late last year). Still, the industry’s “relative resilience and outperformance during the course of the financial crisis have come at a cost,” the agency says. Plentiful capital and spare capacity are putting pressure on premium rates, with prices during the January renewal season falling by 5-10%, on average.

What’s more, insured “catastrophe events” in the first half of 2010 surged to US$22bn, double the average for the six-month period in the previous decade, with the earthquake in Chile and ongoing fallout from the Deepwater Horizon oil spill in the Gulf of Mexico the main culprits. Further above-average losses will, as Fitch warns, cloud an otherwise sanguine outlook for reinsurers.