Tianjin blast equates to $250M loss for Swiss Re

Uncertainty still surrounds Tianjin blast: Swiss Re

The world's second-largest reinsurer, Swiss Re beat analyst expectations Thursday, but estimated that its loss from the Tianjin explosion could total $250 million before tax.

The company reported that its net income had climbed $1.4 billion in its third quarter. The reinsurer's net income increased by 12 percent, to $3.7 billion for the first nine months of 2015, with its chief financial officer, David Cole, telling CNBC there were three basic elements that secured the third-quarter figure.

"We have an incredibly strong, high quality underwriting portfolio; a very high quality, stable investment portfolio, and perhaps most importantly a unique, well diversified and very strong client franchise," Cole told CNBC Thursday.

The company is now dealing with the aftermath of "one of the largest man-made loss events in Asia to date", the Tianjin Blast, with Swiss Re expecting a hefty payout.

A massive explosion rocks Tianjin, China on Aug. 12, 2015.
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In August, two major explosions caused severe damage to the port city of Tianjin, China, after an apparent fire triggered the explosions at a flammable goods warehouse. More than 160 people were killed and damaged several buildings and vehicles.

In September, Zurich Insurance Group said it expects a loss of around $275 million, while insurance specialists estimate costs would exceed $3 billion overall, according to Reuters. Swiss Re's CFO said that while it estimates a loss of $250 million, he expected that figure to change.

"There are some specific issues around the loss, which makes it rather difficult still—even though it was several months ago—to actually come up with a final number," he said.

"We have put up, for the third quarter, across the group $250 million. I think that reflects the best information we have available coming from both market sources, as well as the initial feedback we've been receiving from our clients."

"It's a very difficult situation. It's been difficult to actually get on the site to inspect the losses, so I expect those numbers will continue to change over the course of the next several quarters."

Despite earlier session highs, shares in Swiss Re closed trade 0.4 percent up.

Reuters contributed to this report.