The U.K.’s Wellington Underwriting plc, whose wholly owned subsidiary Wellington Underwriting Agencies Ltd. manages Syndicate 2020 at Lloyd’s, has released a further update about the extent of losses sustained from hurricanes Katrina, Rita and Wilma.
Wellington, which also operates several U.S. subsidiary companies, had originally given overall loss estimates of around $330 million on Nov. 15. The company indicated, however that “significant new notifications received by Syndicate 2020, particularly for Hurricane Katrina, have resulted in a further assessment and increase of the potential net loss estimate for the Hurricanes (including reinstatement premiums) from $330 million to $485 million.”
The announcement noted that the “Group’s share (approximately 66 percent) of these losses has increased by approximately $100 million (£60 million). Consequently, the previously disclosed net impact to Wellington’s 2005 pre-tax profit of £90 million from Hurricane losses will be substantially higher.”
Prior to the adverse development disclosed today, Wellington had anticipated it would report a small pre-tax profit for its 2005 financial year, including the contribution from its investment in Aspen Holdings Ltd. The additional losses reported today will materially affect that estimate.”
Wellington said it still plans to pay a dividend, contingent on they’re being no further large loss events by the end of the year. It also reiterated a previous announcement that Lloyd’s had accepted the Syndicate’s 2006 business plan with a capacity of £800 million ($1.366 billion).
Wellington’s announcement has raised questions in the London market concerning the accuracy of other loss estimates made by a number of Lloyd’s syndicates. Its considered likely that many of those initial figures will also increase as further loss information is received.
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