Lloyd’s Estimates Chile Quake Loss at $1.4 Billion; Oil Spill $300 to $600 Million

May 26, 2010

Lloyd’s of London announced that it estimates its net claims before tax from the earthquake in Chile to be in the order of $1.4 billion. Current estimates for the net claims from the Deepwater Horizon explosion in the Gulf of Mexico are estimated to be between $300 million and $600 million.

“As additional information emerges, Lloyd’s actual ultimate net claims from both events may vary from this preliminary estimate,” the announcement noted.

Lloyd’s added that its preliminary estimate of claims from the two events is “consistent with the upper range of industry insured loss estimates and draws on market share analysis, the application of modeling techniques, and a review of contracts in force as well as early estimates from each syndicate. It is difficult at this time to provide an accurate estimate of the financial impact of these events on the overall market given that both are still evolving.”

Even though the claims may reach or even exceed $2 billion, Lloyd’s said “there will be a negligible impact on Lloyd’s capital and no Central Fund exposure from the events, either individually or collectively.”

Lloyd’s Chief Executive Richard Ward commented: “Clearly these events have had a significant impact on both Chilean and US-coastal communities, as well as a severe environmental cost in the case of the oil spill off Louisiana. Our priority remains to assess and settle valid claims as quickly as possible in both regions and helping to rebuild.

“These figures are our estimates of the market’s total exposure. The claims relating to the Chilean Earthquake will evolve for some time, while the event in the Gulf of Mexico is still developing.”

Source: Lloyd’s of London

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