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Japan Insurance Losses For Quake Est $14.5 Billion To $34.6 Billion

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http://uk.reuters.com/article/2011/03/13/uk-air-worldwide-japan-idUKTRE72C1LH20110313

Last week's earthquake in Japan could lead to insured losses of nearly $35 billion, risk modelling company AIR Worldwide said, making it one of the most expensive catastrophes in history.

That figure is nearly as much as the entire worldwide catastrophe loss for the global insurance industry in 2010, and could be the triggering event that forces higher prices in the insurance market after years of declines.

AIR said its loss estimate range was $14.5 billion to $34.6 billion. That was based on a range of 1.2 trillion yen to 2.8 trillion yen, converted at 81.85 yen to the dollar.

The company cautioned that the estimate was preliminary, and its models do not factor in the effects of the tsunami that followed the earthquake, or any potential losses from nuclear damage.

AIR said that in many cases, buildings will have been damaged by the 8.9-magnitude earthquake and then swept away by the flooding thereafter, making precise counting difficult. The firm intends to issue updated estimates in future combining the quake and the floods.

Looks like some big losses are coming, and they've already had another major earth quake in New Zealand.

I wonder how the markets are going to react on Monday to this, insurance company shares look like they'll be taking a hammering.

Edited by interestrateripoff

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http://www.bbc.co.uk/news/business-12710555

Investors will be watching the Nikkei stock market in Japan when it re-opens on Monday, after it closed down 1.7% after Friday's earthquake and tsunami.

The Bank of Japan will also meet to discuss how to ensure market stability.

Traders will be worried the Nikkei may fall on fears that growth in the world's third-largest economy may slow.

The quake hit just before the exchange closed, so the impact of the disaster was not fully factored in, although Nikkei stock futures did then fall 5%.

Considering the nuclear situation and the fact they are having rolling power cuts will the Nikkei fall further? From the perspective of the big Japanese multinationals what % of overall production is actually done in Japan?

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http://www.telegraph.co.uk/finance/newsbysector/transport/8378249/Japan-shuts-down-as-economic-fears-grow.html

The three largest motor manufacturers – Toyota, Honda and Nissan – said they would stop production at almost all of their domestic assembly plants. The safety of the workforce and deaths were cited as reasons behind the decision. The electronics giant Sony also said it would be shutting down production.

Gerard Lyons, chief economist at Standard Chartered, warned of possible temporary price stagflation and an initial downward move for the country’s economy.

“The timing of the disaster could not have been much worse,” admitted analysts at Capital Economics, pointing to Japan’s economic contraction in the last three months of 2010.

The disaster forced the Bank of Japan (BoJ) to issue a statement, as it draws up plans for an emergency “quake budget”. The BoJ said: “The bank will continue to do its utmost, including the provision of liquidity, to ensure stability in financial markets and to secure the smooth settlement of funds, in the coming week.”

Naoto Kan, the Japanese prime minister, asked BoJ to “save the country” after politicians from both sides of the political spectrum agreed on the need for the budget to introduce emergency spending to fund rescue and clean-up efforts and to resuscitate the economy.

.....

Mr Lyons pointed out that after the Kobe earthquake in 1995 – which was in an economically more important region – the economy followed a V-shape performance curve, with an initial surge downward but with a strong rebound as policy stimulus and private spending returned.

So printy printy is going to save the country?

Looks like total shutdown for the Japanese economy especially if they are going to have a energy crisis.

Clearly this is nothing like what happened with Kobe, it's energy infrastructure wasn't compromised like it is now. Could this be a black swan event for the Japanese economy, could it's debt bubble implode as a result of the damage done?

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http://www.telegraph...fears-grow.html

So printy printy is going to save the country?

Looks like total shutdown for the Japanese economy especially if they are going to have a energy crisis.

Clearly this is nothing like what happened with Kobe, it's energy infrastructure wasn't compromised like it is now. Could this be a black swan event for the Japanese economy, could it's debt bubble implode as a result of the damage done?

dont worry, CDS on insurance firms in London and the US is all covered by counterparty risks nullifying themselves.

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http://uk.reuters.com/article/2011/03/13/uk-air-worldwide-japan-idUKTRE72C1LH20110313

Looks like some big losses are coming, and they've already had another major earth quake in New Zealand.

I wonder how the markets are going to react on Monday to this, insurance company shares look like they'll be taking a hammering.

we will have an idea in about an hour of how the markets will react.

.....asia is open, pm's moving up steadily.

Edited by richyc

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http://www.bbc.co.uk/news/business-12729295

The Bank of Japan is to inject 15 trillion yen ($183bn; £114bn) into the banking system to stabilise financial markets.

Tokyo's Nikkei 225 Index fell 7% on the first day of trading after Friday's quake as the markets assessed the full impact of the devastation.

The amount is the largest ever in a single operation by the Japanese central bank.

The bank also announced steps to ease monetary policy.

"We will take every possible measure, including providing liquidity, to ensure the stability of financial markets," a bank spokesman said.

Japan is facing upheaval on a huge scale as it grapples with the massive clean-up operation, a potential nuclear meltdown, power shortages and huge disruption to the economy.

As the country comes to grips with the extent and scale of the devastation, consumers are expected to withdraw their savings to pay for immediate expenses.

Analysts say that the central bank is making sure there is no panic in the market by ensuring enough liquidity in the banking system.

Looks like they are fearing a bank run as people withdraw cash to pay for the damage caused as many Japanese don't bother with insurance. I wonder what current banking capital ratios look like?

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http://www.bbc.co.uk/news/business-12710555

Japanese shares have tumbled on the first trading day after the massive earthquake and tsunami that hit the country's north-east shore.

Amid record share trading, the Nikkei index ended down 6.98% at 9460 points.

Production was stopped at some of Japan's best-known companies, heavily denting their share prices.

Carmaker Nissan was down by 9.5% after it shut all its plants, while Toshiba, whose products include semiconductors and nuclear reactors, fell 16%.

A Toshiba competitor, Hitachi, also fell 16% and shares in Tokyo Electric Power Company fell by 24%.

Honda, Japan's third-largest carmaker, fell 9.1%.

Some big falls here.

I wonder if the sell off will continue?

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http://www.bbc.co.uk/news/business-12725804

Japan's Prime Minister Naoto Kan has warned that the shutdown of several nuclear reactors is likely to lead to a shortfall in electricity supply.

About a third of Japan's energy is from nuclear power, and with a big proportion of capacity hit by Friday's quake it will make outages necessary.

The east of the country is likely to face substantial shortages, Industry Minister Banri Kaieda also said.

There are fears of further explosions at the Fukushima nuclear power station.

Rolling power cuts clearly isn't going to help production and the economy.

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http://www.telegraph.co.uk/news/worldnews/asia/japan/8379812/Tragedy-might-be-final-straw-for-fragile-confidence.html

With Japan’s public debt already well in excess of 200 per cent of Gross Domestic Product, the scope for spending on reconstruction might seem limited.

But to think this is to misunderstand the nature of Japanese debt markets, where nearly all government bonds are bought by domestic investors.

Substantial repatriation of overseas money ought to ensure that bond markets remain compliant. In theory, then, the medium-term impact ought to be marginal and possibly even mildly positive. Unfortunately, there’s a world of difference between what ought to happen and what will.

There are two big unknowables. One is that there is already a heady mix of negatives: from high oil prices and turmoil in the Middle East to the eurozone crisis and a slowing Chinese economy. Japan’s tragedy might be the final straw for already fragile confidence.

The other is that the very long-term economic consequences of such disasters are completely unpredictable.

The extreme monetary and fiscal stimulus ordered in response to September 11 arguably lit a fuse that led some six years later to the credit crunch.

I thought that the Japanese ability to buy it's own govt debt was nearly exhausted? Although I'm sure if Japan needed the international debt markets uncle Ben would help out.

We are still in the midst of the global financial crisis, I'm sceptical that Japan can easily ride this one.

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Investors...sick fracks the lot of them.

A firm has a problem and they "RUN AWAY"

immediately.

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chicken feed compared to the damage provoked by our friends the masters of the universe. It puts things into perspective

:lol: Beat me to it.

God has nothing on Fred Goodwin and Andy Hornby.

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http://www.telegraph...confidence.html

I thought that the Japanese ability to buy it's own govt debt was nearly exhausted? Although I'm sure if Japan needed the international debt markets uncle Ben would help out.

We are still in the midst of the global financial crisis, I'm sceptical that Japan can easily ride this one.

The other thing is that a lot of these private Japanese investors will be looking to sell their bonds to pay for the damage to their property.

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http://uk.reuters.com/article/2011/03/13/uk-air-worldwide-japan-idUKTRE72C1LH20110313

Looks like some big losses are coming, and they've already had another major earth quake in New Zealand.

I wonder how the markets are going to react on Monday to this, insurance company shares look like they'll be taking a hammering.

I sold my shares in the Lloyds insurer Catlin as soon as the market opened this morning. Looks like I made a mistake, after dropping 4% they're now up 1%.

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http://www.bbc.co.uk/news/business-12732194

Friday's earthquake and tsunami have left parts of Japan's economy "frozen", but analysts forecast that it will bounce back later this year.

Some of the country's leading producers, including the world's biggest carmaker, Toyota, have closed all of their plants in the country.

Analysts at Nomura expect that loss of production to dent the economy during this quarter and the next.

But they suggested growth would return in the third quarter.

"This disaster has in effect temporarily frozen the world's third largest economy," said Richard Soultanian of NUS Consulting, which specialises in the energy supply industry.

The Japanese economy, the third largest in the world, shrank at the end of last year and had been expected to return to growth in the second quarter of 2011.

The experts speak...

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http://www.telegraph.co.uk/news/worldnews/asia/japan/8382139/Japan-crisis-third-explosion-raises-spectre-of-nuclear-nightmare.html

The tragedy is expected to become the costliest natural disaster in history, with the repair bill likely to top £100 billion.

The economic impact was already being felt around the world yesterday as a 6.2 per cent fall in the Nikkei share

index triggered significant losses on stock markets elsewhere. In London, the FTSE-100 fell by almost one per cent over the course of the day, wiping £15 billion off the value of shares.

The cost is getting higher.

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