By John Grant
Reinsurers and Lloyds of London are reeling from the Deepwater Horizon explosion and subsequent oil spill in the Gulf of Mexico that is now estimated to cost in excess of NZ$4.9bn.
Swiss Re has estimated total insured losses from the oil rig at between NZ$2.1 bln and NZ$4.9 bln, and its own loss at NZ$280 mil. Michael Huttner, an insurance analyst and who initially put the insurance industry's liability at NZ$2.25 bln, says Swiss Re's NZ$4.9 bln figure reflects additional costs if the oil comes ashore: "As soon as the oil hits the shore, it triggers additional policies linked to business disruption."
Munich Re, the world's biggest reinsurer, has warned that payouts for the oil spill and such natural disasters as the Chilean earthquake threaten its 2010 earnings target, despite better-than-expected profits in the first quarter.
The Deepwater Horizon rig, owned by Transocean, had a total insured value of NZ$790m. According to reports from Lloyds of London, this has already been claimed for and the claim paid. More updates on the insurance costs will come through later in the month.