Wellington increases Katrina loss estimates to $125mn
Lloyd’s insurer Wellington Underwriting plc has become the latest company to increase its estimated loss exposures from Hurricane Katrina.
In a statement to the London Stock Exchange this morning (4 October), the company said it now expected pre-tax losses of $125mn, up from its earlier estimates of $75mn.
According to the firm, the revision is caused by higher than first anticipated losses in its property treaty account and the company says it is now assuming a market loss of $50bn which will lead to a $195mn loss on its Lloyd’s Syndicate 2020, of which the group has a two thirds share.
The insurer added: “At this level of loss, the property treaty reinsurance protections have been exhausted. In terms of our exposure to further development, we have estimated that an increase in the market loss of $10bn, which bring the total market loss to $60bn, would add approximately $20mn to the Syndicate's estimated net loss”.
In addition the company says it expects losses of $36mn from Hurricane Rita. Like many of its Lloyd’s peers, the insurer has abandoned plans to shrink its Lloyd’s capacity next year and is forecasting “significantly better rating conditions primarily in the energy, direct property and property treaty reinsurance lines” as a consequence of the losses.
In early trading, shares in the company were down 2p at 102.75p.