Lloyd's $3.8bn hit from earthquakes and floods
Saturday 14 May 2011
The world's largest insurance market, Lloyd's of London, has revealed the recent earthquakes in Japan and New Zealand, and floods in Australia could cost its members $3.8bn (£2.3bn).
The Japanese earthquake and tsunami alone will result in net claims before tax of $1.95bn, making it the fourth most expensive natural disaster in the market's history, behind hurricanes Katrina and Ike, and the terrorist attacks on the United States on 11 September 2001 .
Lloyd's published the estimated losses after its 87 syndicates, which underwrite insurance at the market, submitted their maximum exposure to the three events. But Lloyd's said the claims will not have a "material" impact on its capital and it does not expect any exposure to its central fund, the reserves kept for bailouts, either individually or collectively.
Richard Ward, its chief executive, said: "The Lloyd's market is as well capitalised as it has ever been and, while claims from all three events could still evolve over time, the market's total exposure is well within the worst-case scenarios we model and prepare for."
In addition to Japan, the Lloyd's members have estimated a cost of $1.2bn from the earthquake in New Zealand in February and $650m from the floods in Queensland, Australia, the month before. Lloyd's said that the claims were consistent with industry losses of $30bn for Japan, $9bn for New Zealand and $5bn for Australia.
But individually, this year's events are behind the $4.3bn and $2.1bn cost of hurricanes Katrina and Ike in 2005 and 2008 and the $3bn from 9/11. Lloyd's profits slumped by 43 per cent to £2.2bn in 2010, after it was affected by higher-than-average catastrophes, such as the Gulf of Mexico oil spill.
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