A sinking oil rig became the latest disaster to add to the troubles of the London Market.

All 84 people on board the US-owned Key Singapore were rescued when it came adrift from tugs and started sinking about 30 miles off the Israeli coast on 4 December.

Towlines snapped in 27ft high waves as the rig was being moved to a drilling site off Egypt.

It was reported to be in danger of breaking up as Insurance Times went to press.

Owned by GlobalSantaFe International Corporation, Hiscox is lead underwriter on the rig, said a market source, with other Lloyd's insurers in a deal broked by Jardine Lloyd Thompson.

It is thought to have been insured for about $45m. Clean-up costs could push the loss as high as $60m.

Alan Brooks, upstream energy practice leader at brokers Willis, said: "I don't think this will be a market breaking loss.

"[In] one of the worst attritional years on record, it is another body blow."