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Hurricane Sandy : damage could cost Swiss insurers dearly

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Hurricane Sandy, which is set to wreak havoc on the East Coast of the United States, could be costly for Swiss insurers which have covered the highly developed, densely populated area, analysts said on Monday. 

“Even as it approaches, Sandy has provoked some disruption to the economy via precautionary measures” taken to protect the population, noted analysts at the Zurich Cantonal Bank (ZKB).

In New York, one of the world’s leading stock markets will be closed on Monday and possibly on Tuesday as well, market operator NYSE Euronext has said, the first time trading has been cancelled since the September 11, 2001 terror attacks.

“If Sandy hits major cities, we should expect serious damage, not only material damage but also through disruptions to business activity,” ZKB analysts said.

They forecast that the world’s second-biggest reinsurance company, Swiss Re, could face claims totalling several billion dollars, possibly even more than those incurred from Hurricane Katrina in 2005.

That storm resulted in a total 72 billion dollars (55.8 billion euros) in damage covered by commercial insurance companies, of which Swiss Re had covered 1.2 billion dollars in turn.

Analysts at the Swiss asset manager Vontobel estimate that damage from Hurricane Sandy would probably not exceed the quarterly budget of major insurers however, and add that Swiss Re should be able to pay a dividend this year.

Shares in Swiss Re fell by 3.0 per cent to 62.95 Swiss francs in midday trading while those in Zurich Insurance Group were off by 2.88 per cent at 226.0 Swiss francs.

The SMI index of leading Swiss shares have given up a slight 0.08 per cent overall.

Zurich, Oct 29, 2012 (AFP)