Lloyd's sees earthquakes, floods claims at $3.8B

AP News
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Posted: May 13, 2011 7:13 AM
Lloyd's sees earthquakes, floods claims at $3.8B

Lloyd's of London, the world's largest insurance market, has estimated net claims of $3.8 billion before tax from this year's Japan and New Zealand earthquakes and Australian floods.

Lloyd's also said Friday that it expects insurance prices to rise as a result of those events and the recent tornadoes in the United States.

The insurer said that its total estimate includes $1.95 billion in claims for the Japan earthquake and tsunami, $1.2 billion for the New Zealand earthquake and $650 million for the Australia floods.

It cautioned that the final net claims figure "may vary" from the preliminary estimates, but said they are consistent with industry losses of $30 billion for Japan, $9 billion for New Zealand and $5 billion for Australia.

Lloyd's added that there will not be a material impact on its capital and it does not expect any exposure by its Central Fund _ its fund of last resort _ to those three disasters.

The March 11 magnitude-9.0 quake and tsunami that struck Japan's northeastern coast crippled a nuclear power plant and left 25,000 people dead or missing. More than 100,000 remain in temporary shelters.

An earthquake devastated New Zealand's second largest city, Christchurch, and killed at least 169 people on Feb. 22.

Flooding in eastern Australia since November killed 35 people, damaged or destroyed more than 35,000 houses and inundated crops as well as coal mines.

"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," said Lloyd's Chief Executive Richard Ward.

However, he acknowledged that there would be a "firming of rates" following tornadoes that hit U.S. southern states last month. The death toll for the series of more than 200 tornadoes that ripped across six states is above 300, while U.S. officials are still tallying how many homes were destroyed.

Lloyd's is a society of corporate underwriters and wealthy individuals that make insurance transactions through 44 managing agents and 62 syndicates.

Its preliminary estimates draw on market share analysis, the application of modelling techniques, a review of contracts in place and estimates from each syndicate.