The blockage of the Suez Canal for nearly a week will result in a “large loss” for Lloyd’s of London, its chairman said on Wednesday, reports Claims Journal.
The Ever Given container ship blocked the crucial trade route for nearly a week before it was successfully refloated on Monday. More than 400 vessels had been forced to wait on either side of the canal during the blockage.
Lloyd’s chairman Bruce Carnegie-Brown told Reuters the crisis could mean a loss for Lloyd’s of around $100 million. He said: “It’s clearly going to be a large loss, not just for the vessel but for all of the other vessels that were trapped and unable to get through,” adding that Lloyd’s may be on the hook for around 5-10% of total reinsurance claims.
•COVID-19 reinsurance payouts
The 335-year-old specialist insurance market reported a £900 million pretax loss in 2020 on Wednesday, down from a £2.5 billion profit in 2019, as a result of the Covid-19 pandemic. The loss was driven by Covid-19 reinsurance payouts totaling £3.4 billion.
Lloyd’s said it continued to support customers and expected payouts for coronavirus disruption to reach £6.2 billion.
Lloyd’s Chief Executive John Neal said: “Following an extremely challenging year marked by a global health crisis of a scale never seen before, Lloyd’s continued to support its customers with payouts expected to total £6.2 billion in Covid-19 claims.”
“The year was also marked with a high frequency of natural catastrophe claims and the U.K.’s formal exit from the EU, driving further losses and uncertainty,” he added.
The Suez Canal crisis was the last thing insurers needed after a tough 2020 dominated by the Covid-19 pandemic. As Lloyd’s points out, it is still paying out on Covid-19 claims and now it has another source of potential losses to deal with.
On Monday, Fitch Ratings warned the Suez Canal incident would be a “large loss” event for global reinsurers, hitting first-half earnings, which have already been affected by winter storms in the U.S. and flooding in Australia, as well as further pandemic-related losses.
The comments of Carnegie-Brown and Lloyd’s’ 2020 results highlight the extent of the potential hit to earnings for the entire industry from a number of fronts.
Source: Claims Journal