NU Online News Service

Insured losses from the recent explosion of the DeepwaterHorizon Drilling Platform in the Gulf of Mexico could reach $1.5billion, according to Transatlantic Holdings, Inc.

Mike Sapnar, chief underwriting officer for domestic operationsfor New York-based Transatlantic, an international reinsuranceorganization, said during the company's first-quarter 2010 resultsconference call, that he expects Transatlantic's losses to be lessthan 1 percent of industry losses.

Partner Re estimated total insured losses from the explosioncould exceed $1 billion, but noted that ultimate insured losses areunclear "given the multiple parties involved and the ongoingsituation regarding control of the oil spill." The Pembroke,Bermuda-based company said its own losses could reach $60-70million.

Hannover Re indicated its losses could total approximately EUR40million ($53.2 million at current exchange rate).

"Therewith, we remain considerably below our major lossexpectancy for the second quarter," Hannover Re CEO Ulrich Wallinsaid in a statement.

John Nevius, an expert in environmental insurance coverage and ashareholder at law firm Anderson Kill & Olick's New Yorkoffice, said it is too early to predict how claims will unfold, buthe said it is certain there will be many. He noted the firstlawsuits already have been filed.

Speaking to coverages that may be involved, Nevius said that inaddition to traditional liability and business interruptioninsurance, specialty spill-related or other environmental cleanupcoverage is available domestically, generally on a surplus orspecialty market basis.

Offshore international underwriting syndicates, including theLondon market, likely will face large claims as well, he said.

He noted, however, that many organizations have been known toaccept large portions of major oil-spill risks themselves throughself insured retentions or fronting policies.

"Major legal disputes over coverage liabilities are almostcertain, given the scope of the environmental disaster and thestakes involved, including the impacts on fishing and tourism,"Nevius said.

As owners of the well and offshore rig at issue, he said BP PLCand Transocean, Ltd.--a Geneva, Switzerland-based explorationcompany--could face potential liabilities.

Nevius also noted it is unclear whether, and to what extent, BPor Transocean have business interruption coverage, but he said BPwas reportedly leasing the rig for $500,000 per day.

He said Cameron International Corp. and Halliburton Co. havealso been identified in the media as having potentialliability.

"There is plenty of potential liability to apportion at thispoint, but things are only likely to grow more complex," Neviussaid, adding that many companies in the petroleum business havecomplex risk management programs in-place.