Insurance market Lloyd’s of London today estimated that claims arising from hurricanes Gustav and Ike would cost it around £1.3bn (€1.67bn).
Analysts believe the recent storms, which battered the Caribbean and the United States, have left the industry as a whole with losses of up to $25bn (€18.86bn), although Lloyd’s said its own exposure was manageable.
It said claims were well within the outcome of stress tests designed to measure the market’s ability to withstand significant natural and man-made catastrophes.
Lloyd’s chief executive Richard Ward added: “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.”
He said the current priority was to assess and settle claims as quickly possible and in helping to rebuild the communities affected.
Today’s claims estimate is based on an initial analysis of assessments provided by individual syndicates.
Mr Ward added: “It will not be possible, for some time, to have a precise view of the ultimate loss as the full extent of the damage is still unknown and the loss is ongoing.”
The Lloyd’s market, which is home to 75 insurance syndicates, has shown in recent years that it is more than able to cope with major catastrophes.
Among recent changes to modernise the market, Lloyd’s introduced a new franchise structure and phased out the number of Names who backed the market with an unlimited liability.
The market made a £3.8bn (€4.9bn) profit in 2007 after the insurance market benefited from a limited exposure to catastrophes. The figure is set to fall sharply in 2008 after half-year profits dropped 47% to £949m (€1.23m).
It warned in September that profitability in many of its lines was “now questionable” amid rising claims frequency and inflation.
Lloyd’s is not an insurance company but a society of members, both corporate and individual, who underwrite in syndicates on whose behalf professional underwriters accept risk. Supporting capital is provided by investment institutions, specialist investors, international insurance companies and individuals.