Quake insurance losses tipped below US$1b

Earthquake damage showing a large section of seafront collapsed into Lambton Harbour, Wellington.
Earthquake damage showing a large section of seafront collapsed into Lambton Harbour, Wellington.

The 6.5-magnitude earthquake in Cook Strait last Sunday isn't expected to lead to big insurance losses, with global financial services firm Credit Suisse expecting it to come in below US$1 billion.

Credit Suisse has told investors in its insurance-linked strategies fund, CS IRIS Low Volatility Plus Fund, that the quake was further away from dense populations and lacked the ground acceleration of the 2011 Canterbury quake, according to fund investor DCG IRIS, a unit of financial services firm Dexion Capital.

"Given these factors we expect significantly smaller insured losses from this event compared to the New Zealand earthquakes from 2010 and 2011," DCG IRIS said in a note. "Current estimates of insured losses are well below $1 billion and based on these estimates we do not expect any impact on the IRIS Low Volatility Plus Fund."

Just 35 buildings in New Zealand's capital city have sustained damage from the Sunday quake, most of which is seen as largely minor, according to Mayor Celia Wade-Brown.

Some local insurers have stopped writing new business in the Wellington and Marlborough regions in response to the quakes, though they don't anticipate the event will lead to global reinsurers hiking premiums because of the limited damage.

The Dexion unit had net assets of 60.18 million pounds as at May 31, and 4 percent of its investments were exposed to Australasian earthquakes.

July 1 was the renewal of several programmes in Australia and New Zealand, which Dexion said in its May update were under review and that the investment team was looking for opportunities in the region.

- BusinessDesk

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