Lloyd’s has released a preliminary $0.9 billion hurricane Maria claims estimate, and lowered its net claims estimates for hurricanes Harvey and Irma from a combined $4.5 down to $3.9 billion.
“The claims estimate for Harvey and Irma has reduced approximately 10% from the precautionary figure we issued with our half year results last month.
“This is a developing situation and there continues to be a high degree of uncertainty around any claims estimate,” said Jon Hancock, Lloyd’s Performance Management Director.
Recent analysis from Keefe, Bruyette & Woods (KBW) suggests that Lloyd’s could have a market share of 8% or higher, which would make it one of the most exposed to hurricane Maria losses in Puerto Rico.
The $0.9 billion claims estimate for Maria is a low figure, given that the insurance and reinsurance industry has tagged Hurricane Maria as having the highest expected total insured loss impact, out of the three severe hurricanes.
While recent losses from hurricanes Harvey, Irma and Maria, as well as the Mexican earthquakes and Californian wildfires, remain within expected tolerances, rating agency Fitch said they “place some pressure on Lloyd’s capital.”
Hancock said that while these catastrophes will bear a heavy toll, “the claims are spread across the entire Lloyd’s market, which has total net financial resources of £28 billion ($36 billion).
“The devastation caused by these disasters will certainly have an impact on the re/insurance sector as a whole. It also serves as a reminder to all companies that, even in a highly competitive market, they must maintain adequate and sustainable pricing for the risks they are insuring.
“Our ability to pay claims quickly even in difficult circumstance is a clear example of the valuable role that our sector plays in society,” he added.
Lloyd’s reported its’ market has so far paid almost $900 million in claims for Harvey, Irma and Maria.
Fitch has affirmed Lloyd’s ratings, following a review of recent catastrophe event impacts, but remains negative on their outlook.
Fitch expects that while capital is pressured, Lloyd’s will be able to recapitalise, but the losses in the third-quarter of 2017 place additional pressure on the outlook for the re/insurance market.
