Lloyd's of London hit by Katrina; expects loss of £1.4bn |
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Thu, 15 Sep 2005 11:05
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LONDON: Lloyd’s of London said it expects losses amounting to £1.4bn in the wake of hurricane Katrina.
The amount is a provisional estimate, the insurer said, adding that Katrina was a complex catastrophe and the destruction and losses continued even after it receded. Lloyd’s could face another kind of loss from the storm: ratings agency Standard & Poor’s has put the insurance firm on its “CreditWatch Negative” list.
S&P believe the disaster has hurt the firm’s finances and some of its syndicates could incur severe losses. Atrium Underwriting, a Lloyd’s insurer, confirmed that the storm would mean a net loss of £15m.
For the insurance industry, Katrina has proved to be the costliest storm on record. The receding floodwaters allowed experts to calculate some damage: estimated losses from the disaster peaked at £33 billion this week.
For Lloyd’s, the initial estimated loss from Katrina exceeds losses from the four hurricanes that lashed the US last year (£1.3bn). Although it is still less compared to the £2bn loss incurred after the September 11 terrorist attacks.
S&P could also downgrade Lloyd’s from an A although it agreed that the insurance firm’s overall solvency would be unaffected. Besides Lloyd’s, the ratings of nine other insurance groups are under review and are likely to be downgraded.
Lloyd’s said it could bear the cost as it was financially secure with a Central Fund which it would use to pay the claims arising after the catastrophe.
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