Lloyd’s pegs Katrina losses at US $2.55 billion

Lloyd’s of London estimates its market’s net loss as a result of Hurricane Katrina will be 1.4 billion (U.S. $2.55 billlion).
The estimated loss is comparable with the collective impact of four U.S windstorms in 2004, which resulted in a net loss to the market of 1.3 billion (U.S. $2.37 billion).
Lloyd’s wrote to all 44 managing agents asking for an assessment of the financial impact on syndicates. The provisional stimate is based on an initial analysis of those assessments. Managing agents have drawn on the limited information they have so far of their exposure, and on previous work to model exposure to major catastrophes.
“The Lloyd’s Market extends its sympathy to all the individuals and communities affected by Hurricane Katrina and its aftermath,” the company said in a statement. “To date, the market has focused on two immediate priorities. Firstly, providing proper assistance to policyholders facing very difficult circumstances. Secondly, assessing the overall financial impact on the Lloyd’s Market.”
The company said it has developed a series of realistic disaster scenarios to ensure the market can withstand major catastrophes. One of these models the market’s exposure to a Gulf of Mexico windstorm. The financial impact of Hurricane Katrina on Lloyd’s is consistent with that model.
Based on current information, Lloyd’s believes any impact on the Central Fund would be immaterial, and there is nothing to suggest that any syndicate would not be able to trade forwards as a direct result of Hurricane Katrina.
Lloyd’s will give further updates as more information becomes available.