German reinsurer Munich Re recorded a €1.4bn (US$1.63 billion) loss for the third quarter of 2017, in the wake of natural catastrophes in the US and Caribbean regions, but it expects a “significant” market recovery in the future.

The company announced on Thursday that it faced €3.2 billion (US$3.72 billion) in major claims, mostly from Hurricanes Harvey, Irma, and Maria. Due to the claims’ scale, it expects insurance rates to rise in the January reinsurance renewal season. According to the reinsurer’s estimates, the three weather disturbances have caused market-wide insured losses of around US$100 billion.

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After retrocession and before taxes, Munich Re incurred major losses with €3.17 billion (US$3.68 billion) in the third quarter, a huge jump from the €277 million (US$321.9 million) for the third quarter of 2016.

Meanwhile, Munich Re’s insurance arm Ergo saw its operating profits more than double, reaching €297 million (US$345.14 million) in the third quarter.

In its entirety, Munich Re expects group profits to be quite small for the entire 2017 calendar year, given the €146 million (US$169.7 million) in losses for the first nine months of the year.

Jörg Schneider, chief financial officer of Munich Re, said in a statement: “The major losses from natural catastrophes in the third quarter have had a substantial impact on our result. Despite business being otherwise good, this means that we can only post a small profit in 2017. But our capitalization is strong, and we are able to take full advantage of opportunities arising from the likely market recovery.”


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