Lloyds insurers hit as disaster costs balloon

FOUR Lloyds insurers saw their profit forecasts slashed by RBS analysts yesterday due to ballooning losses from natural disasters.

Chaucer, Catlin, Hiscox and Lancashire saw their full-year pre-tax profit estimates cut by up to a fifth due to losses from the earthquake that devastated Christchurch in New Zealand last September.

And insurers, already hit by losses of $5.5bn to $6bn from that quake alone, are likely to be further hurt by fresh losses from the floods in Queensland, Australia, RBS analyst Joanna Parsons warned.

“It seems likely that there will be some notable claims arising from the disaster, especially regarding business interruption and potentially from flooded mines,” she said.

The Queensland floods, which have killed nine people and seen thousands evacuated, are estimated to have cost the Australian economy $6bn so far and the coal industry alone $2bn from mine closures. Analysts are already speculating about insured losses running into billions of dollars.

RBS expects Chaucer’s profit to drop 21 per cent to £34.1m in 2010, after it almost doubled its estimated net loss from the earthquake to $20m from $12.5m last month.

Both Catlin, which upped its estimated loss from the quake by $10m to $45m in December, and Hiscox, had three per cent cut from their RBS profit forecasts, while Lancashire lost two per cent.

Hiscox is one of several reinsurers expected to pay claims from the New Zealand Earthquake Commission's reinsurance programme, which is expected to lodge claims totalling up to N$3.5bn (£1.71bn) resulting from the quake.

Amlin, another of the commission’s reinsurers, also yesterday admitted it lost $160m – more than double its initial estimate of $75m.

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