The World’s Biggest Reinsurer Warns It Will Miss Profit Target Due to Irma, Harvey Damage

Germany’s Munich Re warned it could miss its profit target this year, the first major reinsurer to flag a hit to earnings from damage caused by hurricanes Harvey and Irma.

“These two events are expected to result in high insured losses, which the market and Munich Re are unable to quantify at the moment,” it said in a statement on Wednesday.

Analysts at Jefferies said they expected this to be the first of a series of such statements as insurers count the costs of the destructive storms.

Irma, one of the most powerful Atlantic Ocean storms on record, ravaged several islands in the northern Caribbean, killing at least 60 people, before barrelling into Florida’s Gulf Coast on Sunday, causing further destruction.

Read: From Monte Carlo, Insurers’ View of the Impact of Irma and Harvey Is Surprisingly Rosy

Munich Re had earlier this week estimated losses for the global insurance industry from Harvey, which struck Texas two weeks ago and caused massive flooding, of between $ 20 billion and $ 30 billion, putting the storm on the scale of Hurricane Sandy in 2012.

Shares in Munich Re nonetheless edged up by 0.4 percent in early trade on Thursday, with analysts saying the group had sufficient capital buffers to weather some headwinds.

Munich Re said it would probably report a third-quarter loss due to the hurricanes, but that it had a sufficiently solid capital base to still be able to offer full reinsurance capacity to its clients.

It said it may miss its full-year net profit goal of 2 billion to 2.4 billion euros ($ 2.4 bln-$ 2.9 bln). Analysts on average have forecast 2.35 billion euros, according to Thomson Reuters data.

Munich Re had said as recently as Sunday, at an annual industry meeting in Monte Carlo, that it was not especially exposed to Florida.

Analysts at Jefferies said Munich Re had an advantage over peers such as Swiss Re, given it had one of the largest budgets in the industry to cover natural catastrophes, at 1.4 billion euros for the full year.