MTA expects to claim full limit on Sandy
The Metropolitan Transportation Authority (MTA) in New York has revealed that its losses from Sandy are in the region of $5bn, implying that it will use as much of its $1.075bn programme as it can.
The news was released as sources said that telecoms giant Verizon had notified insurers of a likely $500mn claim, while Morgan Stanley had suggested a $300mn claim and energy company ConEd put forward a surprisingly modest $50mn.
In a presentation dated 28 November published on its website, the MTA said that its "highly provisional" loss estimates envisage $4.75bn of infrastructure damage and $268mn of lost revenue and increased operating costs.
The presentation suggested that after claiming on its insurance ("$1.075bn maximum coverage") and receiving funds from disaster agency Fema, it would likely be left with $950mn of costs to bear itself.
Market sources have said that the Marsh-brokered programme only provides flood cover on the layers up to $800mn, with the $275mn xs $800mn top layer excluding the peril.
Below this the subway operator buys a $350mn xs $450mn layer, a $250mn xs $200mn stretch and a primary layer thought to be $175mn xs $25mn.
There is a $150mn flood sub-limit on the layers that cover the peril, but that only applies if the loss falls in Fema Zone A, which does not appear to be the case here.
Property direct and facultative underwriters have been writing off the programme almost since Superstorm Sandy hit on 29-30 October, with most picking it out as the stand-out single-risk loss in the days after the event.
One source explained that the MTA is one of the market's "prestige" programmes that underwriters seek to get on, and added that it is rated as such.
Underwriting sources said that Liberty Syndicates leads the primary layer, with the $250mn xs $200mn layer led by Ascot.
For a number of weeks underwriters and brokers have been talking about a range of property programmes that look as if they may be hit. However, information has been scarce.
Numbers are now starting to filter through. Verizon, the telecoms provider, is understood to have notified underwriters of a possible $500mn loss - a sum which is thought to fall within the limits of its property cover.
The Morgan Stanley building in downtown Manhattan looks set to produce a circa $300mn claim, sources said.
In contrast, ConEd looks set to deal only a modest $50mn blow. As an energy provider ConEd has been a high profile victim of the storm and received significant media coverage due to an explosion at one of its transformers.
However, the energy company does not purchase business interruption cover and as much of the destroyed equipment is old, it has told insurers to expect a $47.5mn claim net of retention.
Insurers are thought to be sceptical, with most writers of the first $100mn layer expecting this to go at least, with a total cover limit of $500mn.
Other names that continue to be talked about include the Port Authority of New York, which buys $1.425bn of cover excess of $30mn through a captive.
The Port Authority Trans-Hudson railway, which connects New York and New Jersey, has also been disrupted by Sandy. It is understood to purchase a programme that is likely to be hit.
There is also talk of a loss from Fedway, which owns warehouse facilities in New Jersey that store alcohol.
In addition to ConEd, positive news has emerged on the power station in Brooklyn owned by Olympus. Onshore energy writers had been concerned about significant losses, but it has now emerged that the programme is likely to take only a modest hit.
In another development relating to Sandy, it has been confirmed that contrary to early reports linking it to the lead position on the Atlantic States binding authority, Lloyd's (re)insurer Kiln is not involved in backing the New Jersey-based coastal MGA specialist.