Seoul Flooding Losses “Manageable” For Korean Re/insurers

Seoul Flooding Losses “Manageable” For Korean Re/insurers

Seoul Flooding Losses “Manageable” For Korean Re/insurers

Seoul Flooding Losses “Manageable” For Korean Re/insurers

With reinsurers like Korean Reinsurance Co. also able to cover the rainfall losses, losses from Korea’s record rain-induced floods should be manageable for local property and casualty insurers.

In addition to flooding homes, streets, and subway stations in the South Korean capital, record downpours have killed at least nine people.

More than 500 people have reportedly been evacuated since Seoul was hit by torrential rain on Monday night, and an estimated 2,800 structures, including homes, businesses, retaining walls, and other infrastructure, have been destroyed.

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The losses for our rated P/C insurers, including Samsung Fire & Marine Insurance Co. Ltd., Hyundai Marine & Fire Insurance Co. Ltd., DB Insurance Co. Ltd., and Hanwha General Insurance Co. Ltd., “should be manageable compared to their pretax profits,” according to S&P Global.

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Seoul Flooding Losses “Manageable” For Korean Re/insurers

“Their effective reinsurance schemes and well-managed loss experience in the first half of 2022 will support this.”

According to S&P Global, auto insurance will likely represent the bulk of insurance claims. Yet, property/damage claims could further climb with floods hitting parts of the city centre.

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The agency noted that Korean P&C insurers’ portfolios consist of auto insurance (about 22% of total direct premiums written), commercial insurance (12%), and long-term accident and health insurance (66%).

S&P Global has also reported that Korean Re will likely be able to absorb potential losses from heavy rains in Seoul and surrounding provinces this week.

The agency added: “While the rainfall-related claims are yet to be fully reported, we consider this as an earnings event. Korean Re’s excess of loss retrocession arrangement provides a cap on the ultimate losses.

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“We believe Korean Re can absorb the losses at the current rating level. We will continue to closely monitor the development of the claim, particularly for the commercial and auto lines.”

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