LONDON insurers were facing the prospect of further large losses yesterday after a 6.3 magnitude earthquake devastated New Zealand’s largest south island city Christchurch.
The quake, the country’s worst natural disaster in 80 years, struck the busy business district at lunchtime leaving hundreds trapped by fallen buildings and at least 75 dead.
Sources close to Lloyd’s insurers told City A.M. insured losses were likely to start at $5.5–6bn (£3.4-3.7bn), the level incurred from a 7.0 magnitude quake that flattened parts of Christchurch last September.
But they said yesterday’s loss of life and damage to commercial city centre buildings means losses to UK insurers, particularly in the Lloyd’s market, are likely to be far higher.
Lloyd’s could face losses of $330m or more, based on its exposure to last September’s earthquake.
It took a $324m loss from the 2010 quake, equivalent to 5.9 per cent of all losses, said JP Morgan analyst Andreas de Groot van Embden in a note. Amlin lost $160m while Beazley, Catlin, Hiscox and others each lost less than $60m.
Peel Hunt analysts led by Stuart Duncan also expected yesterday’s loss to outstrip the September quake, and said reinsurers of state-backed home insurer the New Zealand Earthquake Commission may be worst-affected.
Lloyd’s spokesperson Sarah Robson said it was too early for it to estimate its exposure to the quake.
“Lloyd’s is contacting all of its partners in the region to ensure they are safe and accounted for. We will do everything we can to support them and to help the city recover by processing and paying claims as quickly as possible,” she said.