Lloyd's announced today that it has provisional loss estimates for net claims from Hurricanes Gustav and Ike in the vicinity of $2.34 billion (?1.3 billion).
For the entire insurance industry the hurricane losses according to analysts estimates total $20-25 billion, Lloyd's said.
Based on current estimates that cover onshore and offshore claims across both windstorms, there will be a negligible impact on Lloyd's capital and no Central Fund exposure, Lloyd's said. The announcement also included a rundown on 2007 storm activity.
The Lloyd's market said in a statement it is "stress tested, through a series of realistic disaster scenarios, to withstand significant natural and man-made catastrophes, and these claims lie well within the outcomes of those stress tests."
Lloyd's CEO Richard Ward commented, "While industry losses from Hurricanes Gustav and Ike are likely to exceed initial forecasts, the claims to Lloyd's will be manageable and in the normal course of business. These exposures are in line with expectations and reflect our strong competitive position in the lines of business affected.
"The market is well positioned to respond to these claims and our strength continues to be underpinned by the effective risk management techniques in place across the market, our strongest ever Central Fund and stable ratings."
Mr. Ward also remarked, "Clearly, these hurricanes have had a significant impact on the coastal and inland communities of the Southern U.S. states, and our priority remains assessing and settling claims as quickly as possible to help rebuild the area."
Lloyd's explained that it wrote to all active managing agents asking for an assessment of the financial impact on syndicates. The provisional estimate is based on initial analysis of those assessments.
Managing agents have drawn on the limited information they have to date in terms of actual claim notifications, supplemented by a thorough analysis of loss potential from policies in the affected region, Lloyd's said.
It will not be possible, for some time, Lloyd's said, "to have a precise view of the ultimate insured loss as the full extent of the damage is still unknown and the loss is ongoing."
Reporting on last year, Lloyd's said despite pre-season forecasts of above average activity, the 2007 season was near average. Despite the establishment of a couple of new records set (including two Category 5 hurricanes making landfall), the impact to Lloyd's was small. The U.S. was lightly impacted–unlike the Yucatan Peninsula and the Caribbean. No storms were sufficiently significant to trigger the new CCRIF (Caribbean Catastrophe Risk Insurance Fund).
The report continued that the United States sustained light losses for the second consecutive year and was affected by only two tropical storms and a single Category 1 hurricane (Humberto–which caused damage to Texas and Louisiana).
The season, however, proved devastating for the Caribbean and Central America, which experienced two Category 5 hurricanes, Dean and Felix, two weeks apart. Dean killed at least 27, also striking the Lesser Antilles Islands, Jamaica, and Mexico. Felix was responsible for 235 people killed or missing in Nicaragua. The Caribbean also suffered deadly flooding rains from Hurricane Noel, which killed at least 150 people in the Dominican Republic and Haiti.
While 2007 was a fairly normal year in terms of number of hurricanes and intense hurricanes, it was above average in terms of number of named storms (14, with an average of 11).
Lloyd's added that the report "is a misleading measure of how active the hurricane season was." It said that seven of this year's storms were weak tropical storms that lasted a day and a half or less. Three of the hurricanes lasted only one advisory at hurricane strength (six hours).
This article was updated 3:45 p.m.
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