Lloyd’s of London insurers including a carrier backed by American International Group Inc. (AIG) are facing claims on the theft of $50 million in diamonds from a Brussels airport, said people with knowledge of the policies.
AIG’s Ascot was the lead insurer on the policy bought by Brink’s Co. (BCO), which was robbed on Feb. 18, and Willis Group Holdings Plc (WSH) was the broker, said the people, who asked not to be named because policy details are confidential. Ascot and Willis have sent loss adjusters to Belgium to probe the heist, said the people who declined to be named.
“We self-insure up to an amount we deem appropriate, and then we use third-party insurers,” said Ed Cunningham, a Brink’s spokesman who declined to identify the companies providing coverage or the size of the loss. “The entire incident is under investigation.”
The robbers broke through a fence and flashed guns at the pilots of a Swiss International Air Lines Ltd. plane and took packets of gems, including rough and unpolished stones. Nobody was injured. Brink’s has repaid all of its customers for their losses, according to Cunningham, who said the company has coverage via the Lloyd’s market. Matt Gallagher, an AIG spokesman, declined to comment yesterday on the heist.
AIG, the insurer that repaid a U.S. bailout last year, takes on Lloyd’s risks through its Ascot Corporate Name Ltd., according to a person familiar with the company’s operations. Policies are sold through Ascot Underwriting Ltd., which is majority-owned by an employee trust, with New York-based AIG having a stake as well, the person said.
AIG dropped 0.8 percent to $37.28 a share yesterday in New York trading, valuing the firm at about $55 billion.
The robbery will have a “significant impact” on first- quarter earnings, Richmond, Virginia-based Brink’s said in a Feb. 20 statement, without providing a specific figure. The company said it was shipping a “portion” of the diamonds.
Ascot was joined by other London insurers in underwriting the Brink’s policy, the people said. Lloyd’s declined to comment. Ascot spokeswoman Jenny Love declined to comment as did Nathan Hambrook-Skinner of London-based Willis.
“It’s a significant claim especially coming so soon after the unprecedented specie losses from superstorm Sandy,” said Mike Burle an underwriter of terrorism, fine arts and specie, which refers to valuable property, risks at Liberty Mutual Holding Co.’s Liberty Syndicates in London. “Increased rates and thus premiums will be seen in many if not all sectors of the specie market.”
The owners of some of the diamonds may have had separate policies, Burle said.
“Either way, the majority of the losses are likely to fall in London,” he said.
Claiming compensation may not be straightforward because questions could be raised about the airport’s security and the valuation of the diamonds, the people said. Rough diamonds are typically more difficult to value than polished stones.
Claims would probably be valid even if the robbery was found to be aided by an employee of a firm involved in transporting the diamonds, according to Philip Turner, the London-based specie practice leader for Marsh Inc., the insurance broker owned by Marsh & McLennan Cos. (MMC) Policies typically only exclude losses from land war and nuclear conflict, he said.
Brink’s probably is responsible for the first several million dollars of losses, with the rest borne by multiple carriers, said Etti Baranoff, an associate professor of risk, insurance and finance at Virginia Commonwealth University.
“There are many layers” of insurance coverage, she said. “The only loss for them will probably be the self-insurance part.”
Lloyd’s, the world’s oldest insurance market, oversees a syndicate system where insurers join to provide businesses with coverage against catastrophes, lawsuits, accidents, and theft. The market’s specie fine art division receives about $700 million of premiums each year, according to Liberty’s Burle.
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