By Simon Jessop, Alessandro Parodi and Laura Lenkiewicz

LONDON (Reuters) -Insured losses stemming from natural catastrophes rose to $50 billion in the first half of 2023, the second highest reading since 2011, reinsurer Swiss Re said on Wednesday.

Severe thunderstorms accounted for 70% of total insured losses, while the February earthquake in Turkey and Syria was the single costliest disaster, the company said in a report.

In the United States alone, thunderstorms caused insured losses of $34 billion, the highest ever in a six-month period, while extreme weather conditions in Florida and California forced some insurers to stop sales in the states.

“The effects of climate change can already be seen in certain perils like heatwaves, droughts, floods and extreme precipitation,” Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, said in the report.

Overall global economic losses totalled $120 billion, 46% above the ten-year average, Swiss Re added, with the insured losses up from $48 billion in the first six months of 2022.

“The above‑average losses reaffirm a 5–7% annual growth trend in insured losses, driven by a warming climate but even more so, by rapidly growing economic values in urbanized settings, globally,” Martin Bertogg, Head of Catastrophe Perils at Swiss Re, said.

As insuring against natural catastrophe grows more expensive, underwriters issued a record amount of insurance-linked securities in the first half of the year, including catastrophe (cat) bonds, which pay the issuer in the event a predefined disaster occurs.

Cat bond issuance spiked to a total of $40 billion – twice that of a decade ago – as insurers hedged against natural disasters and large funds with a higher risk/reward appetite sought attractive investments, Morningstar said in a separate note last week.

Wind events in the U.S., including tornadoes and hurricanes, accounted for almost 70% of the total issuance of the securities in the first half of 2023, the Morningstar report showed.

Funds such as French asset manager Amundi, Zurich-based GAM group, Britain’s Schroders, and Switzerland’s Twelve Capital are among the top investors in this market, Morningstar said.

However, primary insurers are also starting to look at the capital market, mostly driven by capacity issues, Dennis Sugrue, senior director at S&P Global, told Reuters.

Traditionally less prominent markets are opening to natural cat bonds, such as Europe, where the risk transfer needs of insurance and reinsurance companies are driven especially by inflation, Andy Palmer, EMEA & APAC head of ILS structuring at Swiss Re Capital, said

Should natural disasters become more common and intense, large funds will be drawn to the promise of higher returns, Morningstar analyst Paul Olmsted told Reuters, as more dangers will present them with more opportunities.

(Reporting by Simon Jessop in London, Alessandro Parodi and Laura Lenkiewicz in Gdansk; additional reporting by Diana Mandiá Álvarez, Jakub Olesiuk and Elizaveta Gładun; Editing by Kirsten Donovan, Amanda Cooper)

By Victoria Waldersee

BERLIN (Reuters) -Continental said it was fighting for price increases in negotiations with customers and seeking ways to further cut inventory to improve its automotive business performance.

The German auto parts supplier is betting on higher pricing and a focus on premium products to compensate for a declining market in its tyres sector in North America and Europe, which together make up around 70% of its total sales.

Chief Financial Officer Katja Duerrfeld said she did not expect Continental to return to pre-COVID levels of working capital, adding on Wednesday’s earnings call that she forecasts it will fall by around 10% from current levels.

“We are working hard to determine the right level of inventory for the different parts and components we have.”

“We are fighting for our new price negotiations … to make sure we get what we deserve for the products and services we provide,” Duerrfeld added.

Asked about Continental’s position on ongoing negotiations over improved pay and benefits with the United Auto Workers in the United States, Deurrfeld said their demands were “strong” and would lead to a “new category” of cost inflation.

Continental said it currently expects increased costs of 1.4 billion euros ($1.54 billion) from wages, salaries, energy and logistics.

It said it had struggled with higher logistics costs as well as currency change effects primarily from the Chinese yuan and Mexican peso in the second quarter but expected normalisation in the second half.

Continental lowered its tyre sales outlook on Wednesday to 14-15 billion euros from 14.5-15.5 billion previously, but kept its margin outlook unchanged as higher pricing and a focus on premium products boosted second quarter revenue.

It needed to “make up considerable ground” in its automotive segment, which fell short of expectations in the second quarter partly because of currency exchange effects and freight costs.

The company confirmed its lower than expected adjusted earnings margin 4.8% on sales of 10.4 billion euros, as reported in preliminary results in July.

The automotive division’s loss on its earnings margin of 0.6% was below the consensus of a 1% rise, despite meeting expectations for sales at 5.1 billion euros.

Continental said it expects passenger car and light commercial vehicle production to rise 3-5% this year from a previous forecast of a 2-4% rise, but expects the global tyre replacement business to remain unchanged or decline by up to 2%.

Preliminary figures showed Continental’s global passenger car and light commercial vehicle production grew by around 16% in the second quarter compared to last year.

($1 = 0.9101 euros)

(Reporting by Victoria Waldersee, Editing by Friederike Heine, Barbara Lewis and Alexander Smith)