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26

Katrina Damages Cost Up To $30 Bln

German reinsurance giant Hannover Re has become the first reinsurance firm to warn...

German reinsurance giant Hannover Re has become the first reinsurance firm to warn that the cost of Hurricane Katrina will pull its profits lower.

The firm said its full year net profit would reach "at least" the 2004 level of 309.1m euros ($386m), 30% lower than its previous forecast of 430-470m euros - a target it has said is "extremely unlikely".

Many insurance and reinsurance firms have begun to quantify the extent of both the financial damage caused by the hurricane which swept through Mississippi and Louisiana earlier this week, and the extent of likely claims.

With the extent of the damage still unclear but growing more serious by the day, the estimates to date may well fall short of the final bill.

Munich Re, the largest reinsurer in the world, said on 30 August that it was expecting claims of up to 400m euros before tax - although some of that might be passed further down the chain to other reinsurance companies.

Overall, it said, the total insured loss could be $15bn-$30bn.