Lloyd's, the world's leading insurance market, issued the following statement on the impact of Hurricane Katrina on 14 September, 2005.
The Lloyd's Market extends its sympathy to all the individuals and communities affected by Hurricane Katrina and its aftermath. To date, the market has focused on two immediate priorities. Firstly, providing proper assistance to policyholders facing very difficult circumstances. Secondly, assessing the overall financial impact on the Lloyd's Market.
Lloyd's provisional estimate is that the market's net loss as a result of Hurricane Katrina is £1.4bn ($2.55bn).
Lloyd's has developed a series of Realistic Disaster Scenarios to ensure the market can withstand major catastrophes. One of these models the market's exposure to a Gulf of Mexico windstorm. The financial impact of Hurricane Katrina on Lloyd's is consistent with that model. In addition, the estimated loss is comparable with the impact of the four U.S windstorms in 2004, which resulted in a net loss to the market of £1.3bn ($2.37bn).
It should be stressed that it will not be possible, for some time, to have a precise view of the ultimate insured loss because this is a complex catastrophe, the full extent of the damage is unknown and the loss is still ongoing.
Lloyd's wrote to all 44 managing agents asking for an assessment of the financial impact on syndicates. The provisional estimate is based on an initial analysis of those assessments. Managing agents have drawn on the limited information they have so far of their exposure, and on previous work to model exposure to major catastrophes.
The financial position of the Lloyd's market is strong. The impact of major catastrophes is modelled to ensure that the market is able to absorb losses, and in the normal course of business managing agents assume a certain level of major catastrophe loss in their financial planning.
Based on current information, Lloyd's believes any impact on the Central Fund would be immaterial, and there is nothing to suggest that any syndicate would not be able to trade forwards as a direct result of Hurricane Katrina.
Lloyd's will give further updates as more information becomes available.
For further information, please contact:
Caroline Daniell
Tel: +44 (0)20 7327 6256 Fax: +44 (0)20 7327 5229 Email:
caroline.daniell@lloyds.com
Louise Shield
Tel: +44 (0)20 7327 5793 Fax: +44 (0)20 7327 5229 Email:
louise.shield@lloyds.com
Melanie Batley
Tel: +44 (0)20 7327 6125 Fax: +44 (0)20 7327 5229 Email:
melanie.batley@lloyds.com
Steve Farrance
Tel: +44 (0)20 7327 6096 Fax: +44 (0)20 7327 5229 Email:
steve.farrance@lloyds.com
For urgent out of hours media calls Tel: +44 (0)7659 597 825
Find out more about Lloyd's
Lloyd's is the world's leading specialist insurance market with a capacity to accept insurance premiums of more than £13.7 billion in 2005. It occupies sixth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2005, 62 syndicates are underwriting insurance at Lloyd's, covering all classes of business from more than 200 countries and territories worldwide.
Lloyd's is regulated by the Financial Service Authority.
