Lloyd's of London said its provisional estimate of the market's net loss from Hurricane Katrina is ?1.4 billion–amounting to $2.55 billion.
Lloyd's said the financial impact of the storm was consistent with the "Realistic Disaster Scenarios" it has developed to ensure the market can withstand major catastrophes. One of these models includes the market's exposure to a Gulf of Mexico windstorm.
Lloyd's said the estimated Katrina loss is comparable with the impact of the four U.S windstorms in 2004, which resulted in a net loss to the market of ?1.3 billion ($2.37 billion).
It should be stressed, Lloyd's said, 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 said it wrote to all 44 of its managing agents asking for an assessment of the financial impact on syndicates, and the provisional estimate is based on an initial analysis of those assessments.
Managing agents, Lloyd's explained, have drawn on the limited information they have so far of their exposure, and on previous work to model exposure to major catastrophes.
Lloyd's also reiterated previous statements that the financial position of the market is strong. The impact of major catastrophes is modeled 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 said it believes any impact on the market's Central Fund–which pays claims should any syndicates fail==would be immaterial, and there is nothing to suggest that any syndicate would not be able to continuing doing business as a direct result of Hurricane Katrina losses.
Lloyd's promised further updates as it obtains more information.
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