R&SA facing heavy Mexican hurricane losses
UK insurer Royal & Sun Alliance (R&SA) is facing damaging losses of up to $300mn net as a result of Mexican hurricane losses, The Insurance Insider understands.
Hurricane Wilma slammed into the coast near Cancun in mid-October causing devastation to much of the country’s thriving tourist resorts and, according to market sources, R&SA has been left heavily exposed through its Mexican operation with little reinsurance to fall back on.
After restructuring and drastically cutting back its US business in recent years, the company got off relatively lightly from Hurricane Katrina. This, together with vague speculation of a possible takeover, has been a contributing factor in the insurer's improving share price in recent months, which at time of going to press, stood at 115.75p.
In its third quarter results, it said it had revised downwards its estimated loss from the storm by £11mn to £14mn. At the time, it also predicted an impact of just £10mn on fourth quarter results from Hurricane Wilma.
Since its restructure, R&SA has grown rapidly in Latin America, focussing on Brazil, Chile and Mexico. For the first nine months of the year, net written premiums from Latin America were £171mn, a 41 percent increase on the comparable period of 2004.
But it seems the Category 4 storm, which battered the Mexican coast with winds of up to 150 miles per hour, could drag a recovering R&SA into the maelstrom of hurricane driven losses dominating the industry in 2005.
When contacted by The Insurance Insider, R&SA declined to add to its comments on potential hurricane exposure made in its third quarter results.