German reinsurer Hannover Re SE on Wednesday said it would be a "major loss" from the explosion in Beirut, Lebanon, as reported net profit fell 39.3% to 402 million euros ($ 478 million) in the first half of the year .
The reinsurance undertaking adds EUR 380 million to the reserves in the second quarter for estimated losses related to COVID-19.
The increase in reservations reflects that "the length and intensity of the pandemic cannot be predicted," Hannover Re said in a statement.
With the increase in reserves, Hannover Re raised EUR 660 million before tax during the first half of 2020 in the reinsurance of property / damages and its life / health segments from losses related to COVID-1
The provision accounts for incurred but unreported losses that affect its business interruptions, credit and security, and events cancellation lines, said reinsurance chief executives during an income call on Wednesday.
Hanover Re CEO Jean-Jacques Henchoz said during the conversation that June / July Treaty renewals were successful for the company as it benefited from the improved pricing of real estate and damages.
"We used this to grow our business at an increasing rate and on better terms," Henchoz said. The premium for the first half of the year increased by 10.9% to EUR 10.4 billion. In the case of property / non-life reinsurance, the net premium for the first six months increased by 15.2% to EUR 6.9 billion.
Growth was driven by the US market with improved pricing for both primary and reinsurance operations. "On top of that, we were able to increase our stake in a number of profitable accounts in general," Henchoz said.
The price increases received double-digit percentages, said Hannover Re in the statement.
The Beirut explosion on Tuesday will have a "massive" impact on the city's infrastructure, and its presence in an industrial area is likely to indicate a "good level of (insurance) penetration," Henchoz said.
"I'm pretty sure it's going to be a big loss for us, but whether it's low double digits or high double digits or even triple digits, it's impossible for me to comment right now," Henchoz said.
Ammonium nitrate stored in a warehouse in the port of Beirut was reported as the probable cause of the massive explosion on Tuesday that left at least 100 dead, thousands injured and resulted in extensive property damage. € 737 million, well above the € 414 million budgeted for the first six months of the year, it said in its statement.
In addition to losses from the ongoing pandemic, the company said it expects losses of € 31.1 million for tornadoes. in the United States and EUR 26.3 million for bush fires in Australia.  “In total, the net loss of EUR 737 million represents 80% of our large loss budget of EUR 925 million euros for the whole year, and we still have a high hurricane season ahead of us, "said Henchoz.
Its property / Combined quota insurance for non-life insurance deteriorated to 102.3% during the first six months, and the segment's contribution to the Group's net profit decreased to EUR 244.7 million, compared to EUR 431.3 million during the same period 2019.