The cargo market is expecting to pay out at least $100mn after a blaze ripped through a warehouse belonging to US luxury retail store chain Macy’s last week.
Munich Re led the primary $20mn layer of the cargo policy, which is brokered by the reinsurance group’s broking subsidiary Roanoke, according to sources.
The stock throughput policy has an XoL placement with multiple layers, meaning the loss will be absorbed by a range of markets including several London market carriers.
The second $80mn xs $20mn layer of the placement is underwritten by several markets including CNA Hardy and Ironshore's Lloyd's managing agent Pembroke, this publication understands.
The XoL placement is understood to have at least one additional layer stretching above the $200mn mark.
While it is too early to establish a final quantum, as the loss has not yet been adjusted, multiple sources said it was likely to hit $100mn and could rise to $108mn.
The blaze tore through a Macy’s warehouse in Martinsburg, West Virginia on 25 November.
A fire official speaking to the Associated Press said operations at the warehouse had been suspended following the fire.
About 1,000 employees were safely evacuated and the building’s sprinkler system helped to contain the fire, he added.
An undetermined number of packages are understood to have been burned or soaked in what the market is expecting will be a partial loss.
Sources said the warehouse contains a large amount of high-value stock as the retailer gears up for Christmas, and this could affect the quantum.
The extent to which products held in the warehouse are damaged by smoke from the blaze will be key in determining the final figure for the claim, a source added.
Speaking to the Associated Press shortly after the fire, Macy’s spokeswoman Andrea Schwartz said the company was thankful the warehouse workers were safe.
The claim is the latest in a line of stock throughput losses to hit the beleaguered cargo market this year.
In April, cargo underwriters were left expecting a claim of at least $45mn after a fire at a laboratory, belonging to Chilean pharmaceuticals group Pharma Investi, destroyed valuable stock.
Then in May the market was hit by another fire that ripped through a warehouse owned by Brazilian pharma chain Drogarias Pacheco. The claim is understood to have cost the market in the region of $75mn to $80mn.
Sources suggested the Macy’s loss could push underwriters to review their participation on some large cargo accounts and the quantity of stock throughput business they write.
A spokesperson for Munich Re said the carrier does not comment on market rumours.
Pembroke and CNA Hardy did not respond to a request for comment.
A spokesperson for Macy’s declined to comment.