Allianz Expects Net Hit of EUR350 Million from European Floods

By Ulrike Dauer

FRANKFURT--Allianz SE (ALV.XE) said Friday it expects to take a net hit of around 350 million euros ($467 million) from the damage caused by the recent flooding across Germany, Austria, the Czech Republic and Slovakia.

The EUR350 million figure is the net estimate after reinsurance. Allianz, Europe's biggest insurer by premium income, said payments to customers would likely top EUR500 million.

Allianz's estimate comes two days after Italian peer Assicurazioni Generali SpA (G.MI) said it expects EUR100 million in net flood claims, and as other European insurers gradually assess how much of the flood costs they will have to shoulder. The total insured damage from the flooding could be up to EUR4 billion, according to an estimate by insurance broker Aon Benfield, while the economic damage could be around EUR12 billion, according to credit ratings agency Fitch Corp.

The cleanup in Central Europe is in full swing in some areas, but water levels continue to rise and rail transportation remains disrupted in others, after the Danube, Elbe and Rhine rivers and their tributaries burst their banks in eight German states and neighboring countries.

Many fear that the insured damage and economic damage to infrastructure, homes, vehicles and business could exceed the levels caused by the last big flood in the same area 11 years ago. The August 2002 floods, then considered a one-in-100-years event, caused economic losses of EUR16.8 billion and insured losses of EUR3.5 billion, according to data from Munich Re AG (MUV2.XE), the world's biggest reinsurer.

The German government Thursday agreed to set up a national reconstruction fund of up to EUR8 billion, and the countries affected have also requested help from the European Union.

Many smaller German insurers have already come up with estimates for the bill they expect to pay, but some of the bigger names such as reinsurers Munich Re, Hannover Re SE (HNR1.XE) and insurer Axa SA (CS.FR) have yet to provide their assessments.

--Alexandra Edinger contributed to this article.

Write to Ulrike Dauer at [e-mail]

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