Lloyd’s reports hurricane-related losses

Losses incurred as a result of Hurricanes Katrina, Wilma and Rita have led Lloyd’s of London to predict a loss of up to 1.9 billion (US$3.27 billion) for 2005, according to the Company.
This re-estimate of Lloyd’s marketwide losses represents an increase from the Company’s previous estimate of 1.4 billion (US$2.41 billion). Lloyd’s initial estimated, announced in September, was calculated before additional catastrophic loss data was available.
Hurricane Rita alone resulted in a net market loss for the Company of around 535 million (US$920.4 million), according to Lloyd’s. Hurricane Wilma will likely produce net losses of 483 million (US$830.9 million).
“The market expects to be able to meet all its liabilities with immaterial impact on the Central Fund,” a statement released by Lloyd’s states. “The Central Fund, to which all syndicates in the market contribute, is intended to meet the liabilities of syndicates that can not pay all of their losses.”
Lloyd’s adds that it does not anticipate that any Lloyd’s syndicate will be unable to trade forward as a result of the hurricanes.”
Previously the market’s ceo Nick Prettejohn, said that the Company anticipated that although Katrina would have a significant bearing on its 2005 profits the Company would still see a profit for the year end if they did not experience any further major catastrophic losses.
Most recently however, Lloyd’s reports that given the development of loss figures for Katrina and the impact of Wilma that they did not expect the market making would see a profit in 2005.
Additionally, the Company says that underwriting capacity for 2006 will be approximately 14.7 billion (US$25.29 billion), which represents a 7% increase than capacity for 2005. This is a result of several syndicates revising their business plans to take advantage of increased rates in catastrophe-related classes of business.