Swiss Reinsurance Co., the world’s second-largest reinsurance company, on Monday doubled to US$40 billion its estimate of claims the global insurance industry will face from hurricane Katrina – a figure that would make it the world’s costliest hurricane ever.

Swiss Re, which previously agreed with the world’s largest reinsurer Munich Re that the total losses would be US$20 billion, said it increased loss estimates because the damage caused by the hurricane was greater than thought.

“Due to the unique nature of the event, the complexity and the magnitude of destruction caused, accurate claims estimates remain difficult,” the Zurich-based company said.

Swiss Re also more than doubled to $1.2 billion the estimate of the claims the company itself may face, which means it will fail to meet its earnings-per-share growth target of 10 per cent this year. It previously had estimated its claims would be about $500 million.

Hannover Re AG, the world’s third-largest reinsurer by gross premiums, noted that some estimates for Katrina’s insurance losses go as high as US$60 billion. It said that could mean it also might have to revise its net profit forecast below a previous estimate of at least US$384 million.

“If the total insured loss is in the area of US$40 billion to $60 billion, our exposure will be above the previous estimate of 250 million euros pretax, and this could lower our group net income,” CEO Wilhelm Zeller said during an insurance industry meeting in Monaco.

Munich Re said it also will raise its estimates after it evaluates its exposure to the hurricane.

Risk Management Solutions Inc. of Newark, Calif., last week raised its forecast for the total insured loss caused by Katrina to US$40 billion to $60 billion, up from its previous estimate of US$20 billion to $35 billion. It now sees the total economic damage caused by the hurricane above US$125 billion, up from its previous estimate of above $100 billion.

The revised estimates would make Katrina the most costly hurricane ever, ahead of Andrew in 1992, when claims reached US$22 billion with figures adjusted to current dollar values, according to Swiss Re figures.

Swiss Re said it will use its reserves to cushion the impact of the hurricane.

Swiss Re shares fell in early trading, but recovered and by late morning were up 0.6% at 82.90 Swiss francs (US$66.70) on the Zurich exchange.

“Swiss Re’s financial strength remains very strong and is expected to grow further in the second half of the year,” the company said. It confirmed it plans to pay a dividend of 2.50 francs (US$2.01) per share for 2005.

Chief executive John Coomber said the higher frequency of natural disasters would force up prices in coming renewals.