Lloyd’s announced that it had completed a preliminary assessment of the possible losses from last Tuesday’s terrorist attacks in the U.S., and although it gave no specific figures, it stated that “these exposures can be managed within its unique system of financial security.”
Chairman Sax Riley confirmed that the Lloyd’s market was “open for business and trading normally.” It had tested its ability to cope with the disasters by projecting them using modeling techniques involving the crash of two jets above a U.S. city, and models of extensive urban property damage.
“Last week’s tragic circumstances do not exactly match these scenarios, however this knowledge, combined with our initial estimates, suggests that Lloyd’s can manage the financial impact of the US attacks,” Riley indicated.
Lloyd’s insurers are currently calculating the exposures they may face. The largest, Australia’s QBE, has said it expects substantial losses (see following article), and Amlin Plc, another large Lloyd’s group, announced that it expected its net exposure to be around £45 million ($ 65.7 million). Amlin’s publicly traded shares have declined 50 percent since last Tuesday.
In a related move the War Risks Rating Committee at Lloyd’s announced an increase in the areas subject to a “war risk” surcharge on their coverage. It singled out Pakistan, Egypt, Yemen, Oman, Syria and Algeria as well as shipping in the Gulf of Oman and the Red Sea as “war risks.
According to London’s Financial Times rates on Very large Crude Carriers have risen more than 40 percent since last Tuesday. The FT indicated that while such premiums are confidential, they can be substantial. It noted that rates for cargo bound for Sri Lanka’s capital Colombo had increased by 4000 to 28,000 percent,and hull and machinery premiums went from .0025 to .7 percent following a terrorist attack on the airport.
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