Lloyd's Thai Floods Estimate

14 February, 2012

Lloyd’s has announced today that its estimated net claims from the Thai floods towards the end of last year amount to some US$2.2bn, assuming an overall insured loss to the global insurance industry of US$15bn to 20bn. To put this in perspective, it is higher than Lloyd’s $1.95bn initial estimate last May for the Japanese earthquake. The $2.2bn includes approximately $0.7bn which has widely been reported as the figure for RJ Kiln Syndicate 1880, which is covered by a legally binding guarantee from the owners of RJ Kiln, Tokio Marine. As noted above, the cost to Syndicate 1880 is not born by Names. Excluding Syndicate 1880, the estimate reduces to £950m, which is approximately 4% of Lloyd’s 2011 capacity, again excluding 1880. This is actually marginally lower than the 5% of capacity ‘guesstimate’ which the ALM included on page 9 of the December issue of ALM News, where (subject to all sorts of caveats) it guessed that “the 2011 account could produce a pure year profit in the region of 5% or more of capacity”. The latest news does not change this guess. Note: the above guess refers to the three-year accounting method used for apportioning results between members. It would be entirely consistent with Lloyd’s reporting a sizeable 2011 loss next month on an annual accounting basis. The difference arises partly because most of the catastrophes earlier in 2011 will actually hit the 2010 account under the three-year accounting method, since the relevant insurance policies mostly incepted in 2010.

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