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Bermuda insurance market suffers $3b hit from Sandy

Picking up the tab: Bermuda market re/insurers have estimated about $3 billion in claims from superstorm Sandy

The Bermuda re/insurance market is set to pay out $3 billion in claims relating to Superstorm Sandy - and that payout could yet get much bigger.Seventeen of the Bermuda market companies have reported preliminary estimates for Sandy-related losses, adding up to $2.987 billion in potential claims.The charges for most firms will be booked against their fourth-quarter results and since they are preliminary estimates, the total aggregate hit could be even higher.Superstorm Sandy, which hit the US Northeast in late October killed more than 100 people, flooded New York City subways and ravaged beach towns from New Jersey’s Atlantic City to Bridgeport, Connecticut. The storm left tens of thousands homeless, cut power to more than eight million homes, crippled mass transit and inflicted billions of dollars in infrastructure damage.Parts of New Jersey, New York and Connecticut are still reeling from its wrath.The impact of business interruption losses could still be mounting and, as such, the estimates given by companies could be even higher once all the claims are submitted.Predictions of the insurance industry’s losses suggest that the final industry-wide tally from the massive storm could be in the range of $20 billion to $25 billion.Bradley Kading, executive director of the Association of Bermuda Insurers and Reinsurers (ABIR), which represents 22 Bermuda market operators, said Bermuda’s share could climb much further."Bermuda's reinsurers will be making billions of claims payments to US consumers as a result of Hurricane Sandy,” Mr Kading said. “Our hearts go out to those who lost their homes or their loved ones. Meanwhile, as recovery continues we're doing what we are supposed to be doing - supporting our clients by paying claims.“The Bermuda share of Sandy claims will be significant - perhaps as much as $5 billion if losses total $20 billion to $25 billion.”He said Sandy was another example of why legislation designed to force non-US reinsurers to pay more tax, such as the Neal bill, did not serve the interests of Americans.“The disaster illustrates the value of reinsurance and illustrates the need to globally pool such catastrophic risk,” Mr Kading said. “Protectionist measures that ring fence capital through regulatory or tax policy are destructive to our ability to serve our clients. We will continue to oppose such measures."Zurich Insurance Group AG, Switzerland’s biggest insurer, said claims from Superstorm Sandy are estimated at about $700 million.That includes $40 million related to Farmers Re in connection with the reinsurance provided to the Farmers Exchanges.Bermuda is no stranger to responding to worldwide disasters, natural or man-made. According to ABIR, Bermuda market companies shouldered 40 percent of all reinsurance costs associated with the 2011 natural catastrophes, a record year for global natural catastrophes, including earthquake disasters in New Zealand and Japan, flooding in Australia and Thailand and hurricane and windstorm losses in the US and Australia.Bermuda’s reinsurers also paid out more than $17 billion of claims relating to Hurricane Katrina and two thirds of reinsurance payments for 2011’s Hurricane Ike paid to Texas Windstorm Insurance Association. Hurricane Ike was the third-costliest hurricane ever to make landfall in the US, the costliest hurricane in Texas history.

<B>Estimated Sandy payouts</B>

PRELIMINARY SANDY LOSS ESTIMATESAce: $380 millionAllied World: $165 millionArch Capital: $170-240 millionArgo Group: $45-55 millionAspen: $175 millionAxis Capital: $300 millionCatlin Group: $200 millionEndurance: $160 millionFlagstone Re: $39 millionLancashire: $40-60 millionMaiden: $25-35 millionMontpelier Re: $95 millionRenaissanceRe: $130 millionPartnerRe: $200-240 millionPlatinum: $30 millionValidus: $333 millionXL Group: $350 million