Claims will top £1.3bn, but market’s boss says there is no need to draw on central fund.
Lloyd’s has moved to reassure the market that losses from hurricanes Gustav and Ike, while topping £1.3bn, are manageable and in the “normal course of business”.
The market’s statement, released on Tuesday, followed warnings from Lloyd’s insurers Amlin and Omega that their 2008 profits would be hit hard by the hurricanes.
Lloyd’s has written to all managing agents asking them to predict their losses.
However, it estimates there will be negligible impact on capital and no need to draw on its central fund.
Richard Ward, chief executive of the London market, said: “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.”
Ward added: “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.
“Clearly these hurricanes have had a significant impact on the coastal and inland communities of the southern US states and our priority remains assessing and settling claims as quickly as possible to help rebuild the area.”
Amlin estimated its losses at $285m (£167m), of which $137m came from its Lloyd’s syndicate and $148m from its Bermuda-based reinsurance business.
Omega, a smaller insurer, said its losses had amounted to $34m so far.
Lloyd’s put the aggregate loss to the industry at $20bn to $25bn. Omega said losses were currently estimated at $11bn to $19bn, but that the final “losses would be materially larger than these figures”.
Shares in Amlin slipped 6.5p to 281.25p, while shares in Omega fell 9p to 140.25p on Monday.